Bank reconciliation
A bank reconciliation is the process of matching the
balances in an entity's accounting records for a
cash account to the corresponding information on a
bank statement .
• Deposit in transit. Cash and/or checks that have been
received and recorded by an entity, but which have not
yet been recorded in the records of the bank where the
entity deposits the funds.
• Outstanding check. A check payment that has been
recorded by the issuing entity, but which has not yet
cleared its bank account as a deduction from cash.
• NSF check. A check that was not honored by the bank of
the entity issuing the check, on the grounds that the
entity's bank account does not contain sufficient funds.
Example :- It shows from the sent statement to free company's
credit balance of($2,405,000) while the bank balance of a debtor
in the books (records) of amount ($2,545,000) When checking the
cause of the difference was found the following :
1.the statement expenses is appear in the bank statement of
amount ($2,000) but did not appear in the books (records).
2.deposits recorded in the books(records) of amount
($205,000)but did not appear in the bank statement.
3. the interests are collected on the notes receivable at the bank of
amount ($40,000) appear in the statement but did not appear in
the books (records).
4.checks are paid but Did not review their owners of the bank to
be drawn of amount ($32,000).
5.Deposit for $ 5,000 by error.
6.paid The amount to accounts payable of $ 20,000 in check, and
when the audit shows that the correct amount of $ 30,000.
Required :- prepare the Bank Reconciliation Statement by three
methods.
Example :- It shows from the sent statement to free company's
credit balance of($3,000,000) while the bank balance of a debtor in
the books (records) of amount ($3,500,000) When checking the cause
of the difference was found the following :
1.the statement expenses is appear in the bank statement of amount
($200,000) but did not appear in the books (records).
2.deposits recorded in the books(records) of amount ($450,000)but
did not appear in the bank statement.
3. the interests are collected on the notes receivable at the bank of
amount ($50,000) appear in the statement but did not appear in the
books (records).
4.checks are paid Did not review their owners to be drawn of
amount ($100,000).
Required :- prepare the Bank Reconciliation Statement by three
methods.
Example :- At the beginning of June 2014, Baghdad company
received a bank statement the showed the current account balance
as at 31 May amounting to ID 3250. However, the general ledger
showed a book balance of ID 2760. Baghdad Co. issued the following
checks
Check no. 112 of ID 900
Check no. 116 of ID 1350
Check no. 122 of ID 750 to the suppliers , but the payment did not
appear in the bank statement because it was not yet received by the
bank. In addition, Baghdad Co. deposited ID 2500 at the end of the
month, but this was also not appear in the bank statement. Besides
that, the bank had debited Baghdad's Co. account with ID 10 being
the service charge.
Required:- Prepare a bank reconciliation statement at 31 May, 2014,
by using Adjustments the two balances to reach to one corrected
balance method.
Baghdad Company
Bank Reconciliation Statement 31 May, 2014
Balance as per bank statement,31 May, 2014
Add: Deposit in transit
Deduct: Outstanding(undrawn) checks
= Adjusted bank balance
Balance as per book balance
Deduct: bank service charge
= Adjusted Book balance
3250
2500
(3000)
2750
2760
(10)
2750