GRADE 11
LESSON
WEEK 2 - Lesson 2 of 4
2
BANK RECONCILIATION
WORKSHEET 2
BANK STATEMENT
Records of the business
The business keeps record of all cash transactions by entering
information in the Cash Receipt Journal and Cash Payment Journal
Records of the bank
The bank keeps record of all the transactions done with the business in
the books of the bank. The bank sends a statement to the business
showing its record of transactions.
This is called a bank statement.
The bank statement is received from the bank which is a summary of
all bank transactions of the business processed by the bank.
The bank statement is the bank account in the books of the bank and
is sent to the business at the end of the month so that it can be
compared to the books of the business.
There will be differences between the bank statement and the cash
journals due to transactions by the bank, for example bank charges and
interest.
The bank statement
is the source
document
2 Accounting Grade 11 CAPS
1
Comparison between the bank statement and current account
BOOKS OF THE BUSINESS
GENERAL LEDGER OF SUN TRADERS
+
dr
-
BANK
CRJ
receipts
(deposit slips)
increase +
CPJ
payments
(cheques)
decrease -
favourable
unfavourable
cr
BOOKS OF THE BANK
GENERAL LEDGER OF ABC BANK
dr
-
SUN TRADERS +
Cheques
Deposits
decrease -
increase +
unfavourable
favourable
cr
When the business deposits money into the bank:
 the business will debit the bank account (CRJ) – it is an asset to the business
 the bank will credit the bank statement – it is a liability to the bank
When the business issues cheques:
 the business will credit the bank account (CPJ)
 the bank will debit the bank statement
Therefore:
Favourable bank balance (when the business has money)
 debit balance in the bank account of the business
 credit balance on the bank statement
Unfavourable bank balance (an overdraft)
 credit balance in the bank account of the business
 debit balance on the bank statement
2 Accounting Grade 11 CAPS
2
Comparing the cash journals and bank statement
The books of the business and those of the bank should agree, and the bank balance should
be the same in both sets of books.
There are, however, differences.
The CPJ and CRJ should be compared to the bank statement to see the differences.
Reasons for the differences between the bank statement and the
cash journals
-
Bank charges – is directly deducted from the bank statement by the bank
-
Debit orders – monthly payments directly deducted from the bank account
-
Dishonoured cheques – cheques received for payment and deposited by the business,
are returned by the bank as dishonoured (R/D) because of the following reasons: it may
be that there is no money in the account or it may be another reason e.g. the cheque is
not signed or the cheque is stale i.e. older than 6 months.
-
Interest on overdraft – interest payable to the bank by the business and directly
deducted by the bank
-
Interest on current account – interest received by the business on a favourable balance
and credited directly to the account by the bank
-
Outstanding cheques – cheques paid by the business are entered in the CPJ, but some
have not yet been presented for payment to the bank and are therefore outstanding
-
Outstanding deposits- deposits made by the business after the bank statement was
finalized and which do not reflect on the bank statement
-
Direct deposits not yet entered in the CRJ – deposits directly deposited into the bank
account of the business and reflect on the bank statement but not in the cash journal
-
Post-dated cheques issued – these cheques are entered in the CPJ, but the payee has
not yet presented the cheque to the bank for payment, and therefore it is seen as an
outstanding cheque.
The Bank Reconciliation Statement is drawn up which reflects the differences between the
balance in the Bank account from the business side and the balance on the Bank Statement,
in order reconcile the books with those of the bank.
.
The Bank Reconciliation Statement
is seen from the point of view of the bank
2 Accounting Grade 11 CAPS
3
EXAMPLE OF A BANK STATEMENT
BANK STATEMENT
SUN TRADERS
SHOP 23
OLD MUTUAL CENTRE
43 CHURCH STREET
PRETORIA
0001
XYZ BANK
ARCADIA BRANCH
12 PICKET STREET
PRETORIA
0001
Deposit by the business
(credit on bank
statement)
ACCOUNT NUMBER 00786789
CURRENT ACCOUNT
STATEMENT PERIOD 1 AUGUST 2013
Interest
on
overdraft
(115-)
Description
Balance brought forward
Credit
Cheque 401
Cheque 402
Cheque 404
Cheque 403
Interest
Unpaid cheque
Credit
Service fee
Cheque 405
Levy on debit transactions
Also Insurance Company
Credit
Cheque 406
Cheque 407
Credit
Cheque 408
Credit card levy
Credits, Debits
7 350 +
275 189 5 320 6 600 115 310 7 960 +
78 1 140 9220 7 080 +
6 585 3 710 13 000 +
1 320 22 -
Stop order for
insurance policy
TO 30 AUGUST 2013
Date
01-08-2013
01-08-2013
02-08-2013
02-08-2013
05-08-2013
05-08-2013
06-08-2013
08-08-2013
09-08-2013
12-08-2013
14-08-2013
15-08-2013
21-08-2013
22 -08-2013
30-08-2013
credit balance
Balance
8 8771 5271 8021 9917 31113 91114 02614 3366 3766 4547 5947 6037 8237437 328
11 0381 962
642
620
Debit balance
(overdraft)
Note:
All deposits are credit (+) amounts
All payments (cheques, bank charges, stop orders) are debit (-) amounts
2 Accounting Grade 11 CAPS
4
CHALK BOARD SUMMARY
BOOKS OF THE BUSINESS
GENERAL LEDGER OF SUN TRADERS
+
dr
BANK
-
CRJ
receipts
(deposit slips)
increase +
CPJ
payments
(cheques)
decease -
favourable
Unfavourable
cr
BOOKS OF THE BANK
GENERAL LEDGER OF ABC BANK
dr
Cheques
2 Accounting Grade 11 CAPS
SUN TRADERS +
Deposits
decease -
increase +
unfavourable
Favourable
cr
5