Example 1~Cash Book ( Bank Column Only )
$ 2006
2006
Aug1
Balance b/f
40 Aug11 G.Wong
Aug10 K.Chan
60 Aug23 H.Chik
Aug31 Balance c/f
100
$
25
45
30
100
Bank Statement
2006
Aug5
Aug 10
Aug11
Dr.
$
Balance b/f
K.Chan
G.Wong
Cr.
$
60
25
Balance
$
40 Cr.
100 Cr.
75 Cr.
1
1. Should the ending balance of the Cash Book
and Bank Statement be the same?
2. Why they should be the same?
3. Can you tell me why there is a difference
between their ending balances?
2
• Timing differences
E.g. A receipt of $50 from A.Lee on
Aug 28 were credited by the bank on Sept 3
• Omissions and Errors
E.g. A payment of electricity fee by the bank of $300
was omitted in the Cash Book
3
( 1 ) Unpresented Cheques
• Cheques issued by the firm not presented
for payment by the bank.
E.g
Cash Book (Bank)
2005
$
Dec 31 Furniture 100
Bank Statement
2006
Jan 10 Furniture
Dr.
$
100
Cr.
$
Balance
$
100 Dr
4
• Deposits entered into the Cash Book
but not yet appeared on Bank Statement
E.g
2005
Dec 30
Cash Book (Bank)
$
Sales 100
Bank Statement
2006
Jan 2 Sales
Dr.
$
Cr.
$
100
Balance
$
100 Cr
5
• Payments made directly through the bank
E.g
Cash Book (Bank)
2006
Jan 3 Rates
$
700
Bank Statement
2005
Dec 20 Rates
Dr.
$
700
Cr.
$
Balance
$
700 Dr
6
•Charges for banking services made by the bank for
•the company
E.g
Cash Book (Bank)
2006
Jan 3 Bank Charges
$
20
Bank Statement
2005
Dr.
$
Dec 25 Bank Charges 20
Cr.
$
Balance
$
20 Dr
7
• Standing instructions from the firm to
make regular payments by the bank
E.g
Cash Book (Bank)
2006
$
Jan 2 subscriptions 300
Bank Statement
2005
Dec 10 subscription
Dr.
$
300
Cr.
$
Balance
$
300 Dr
8
•Collection from customers made direct to the bank
•through the banking system
E.g
Cash Book (Bank)
2006
$
Jan 2 subscriptions 400
Bank Statement
2005
Dec 17 subscription
Dr.
$
Cr.
$
400
Balance
$
400 Cr
9
•Cheque deposited into the bank but returned by the
bank marked ‘refer to drawer’ ( i.e. the drawer fails to
pay )
E.g
Cash Book (Bank)
2005
$
Dec 7 A.Chan
500
Bank Statement
2005
Dr.
$
Dec 9 A.Chan
Dec 11 A.Chan
500
(Refer to drawer)
Cr.
$
500
Balance
$
500 Cr
0
10
•Interest received from the bank for deposits or fixed
•deposits into the bank
E.g
Cash Book (Bank)
2006
$
Jan 2 Interest
received
10
Bank Statement
2005
Dr.
$
Dec 20 Interest received
Cr.
$
Balance
$
10
10 Cr
11
• Explain the reasons for differences
• Identify errors and omissions in the
Cash Book and the Bank Statement
•Make corrections
12
Example 2
2006
Aug1
Aug10
Cash Book ( Bank Column Only )
$ 2006
Balance b/f
40 Aug11 G.Wong
K.Chan
60 Aug23 H.Chik
Aug31 Balance c/f
100
$
25
45
30
100
Bank Statement
2006
Aug 1
Aug 10
Aug 11
Dr.
$
Balance b/f
K.Chan
G.Wong
Cr.
$
60
25
Balance
$
40 Cr.
100 Cr.
75 Cr.
13
Bank Reconciliation Statement as at 31 August 2006
Balance in hand as per Cash Book
$
30
Add
45
Unpresented cheque : H.Chik
Balance in hand as per bank statement
75
Bank Reconciliation Statement as at 31 August 2006
Balance in hand as per Bank Statement
Less: Unpresented cheque :H.Chik
Balance in hand as per Cash Book
$
75
45
30
14
Exercise1
2008
Dec26
Dec28
Dec 31
2008
Cash Book
$ 2008
500 Dec27 Y. Chan
70 Dec29 C.Cheung
230 Dec31 Balance c/f
800
Balance b/f
G.Poon
A.Tang
Bank Statement
Dec 26 Balance b/f
Dec 29 Cheque
Dec 30 Y. Chan
Credit Transfer:
L.Chung
Bank Charges
Dr.
$
Cr.
$
70
100
60
20
$
100
25
675
800
Balance
$
500 Cr.
570 Cr.
470 Cr.
530 Cr.
510 Cr.
15
Example 3
2006
Aug27
Aug29
Aug30
2006
Aug 27
Aug 29
Aug 30
Aug 30
Aug 30
Cash Book ( Bank Column Only )
$ 2006
Balance b/f
400 Aug28 W.Wong
T.Pong
50 Aug30 A.Kong
G.Lee
110 Aug31 Balance c/f
560
Bank Statement
Dr.
$
Balance b/f
Cheque
W.Wong
Credit transfer: G.Lau
Bank Charges
Cr.
$
50
55
60
40
$
55
20
485
560
Balance
$
400 Cr.
450 Cr.
395 Cr.
455 Cr.
415 Cr.
16
What is the amount difference
between the Cash Book and the
Bank Statement?
Answer :
$485-$415=$70
17
Credit Transfer
Bank interest
Debit Cash Book
(since not yet
entered in Cash
Book)
Standing Order/ Direct Debit
Bank Charges
Credit Cash Book
(since not yet
entered in Cash Book)
Dishonoured Cheques
18
Cash Book
2006
$
Aug 31
Balance b/f
Aug 31
Credit transfer
2006
485 Aug 31
60 Aug 31
545
$
Bank charges
Balance c/f
40
505
545
19
Bank Reconciliation Statement as at 31 August 2006
$
Balance in hand as per Cash Book
505
Add
Unpresented cheque :A.Kong
20
525
Uncreditd items
110
Less
Balance in hand as per bank statement
415
20
Bank Reconciliation Statement as at 31 August 2006
$
Balance in hand as per Cash Book
Add
$
485
Unpresented cheque :A.Kong
20
Credit transfer : G.Lam
60
80
565
Less
Uncredited items : G.Lee
Bank charges
Balance in hand as per Bank Statement
110
40
150
415
21
Bank Reconciliation Statement as at 31 August 2006
$
Balance in hand as per Bank Statement
Add
Uncredited items :G.Lee
Bank charges
Less
Unpresented cheque :A.Kong
Credit transfer :A.Lam
Balance in hand as per Cash Book
$
415
110
40
150
565
20
60
80
485
22
Items
1)
Unpresented
cheque
2)
Uncredited
items
3)
Direct
debits
Effect on
Cash Book
balance
Effect on Adjustment Adjustment
Bank
to Cash
to Bank
Statement Book
Statement
balance
balance
Balance
一
十
一
十
一
十
一
十
一
23
Items
4)
Bank
charges
5)
Standing
orders
6)
Credit
transfer/
direct
credits
Effect on
Cash Book
Effect on Adjustment Adjustment
Bank
to Cash
to Bank
balance
Book
Statement
balance
balance
一
一
十
一
一
十
十
十
一
24
Items
Effect on
Cash Book
Effect on Adjustment Adjustment
Bank
to Cash
to Bank
balance balance
balance
7)
Dishonoured
cheque
一
一
十
8)
Interest
allowed by
the bank
十
十
一
25
Bank Overdrafts
(Shown by a credit Balance in the Cash Book)
Cash Book
2006
Nov1
Balance b/f
$
300
Bank overdraft
Bank Statement
2006
Nov1
Dr
$
Balance b/f
Cr
$
Balance
$
300 O/D
26
Example
2007
Dec 4
Dec 24
Dec 29
Dec 31
Dec 31
A. Ko
N. Ng
M.Ming
B.Tam
Balance c/d
Cash Book
$ 2007
X 290 Dec 1
X 110 Dec 5
110 Dec 23
103 Dec 29
199 Dec 31
$
Balance b/f
522
K.Wong
120
D.Fung
50
A.Co
70
Bank Charges 50
812
812
Bank Statement
2007
Dec 1
Dec 5
Dec 24
Dec 29
Dec 29
Dec 31
Dr.
$
Balance b/f
Cheque
K.Wong
120
Cheque
M.Ming: Credit Transfer
A.Co.
70
Bank Charges
50
Cr.
$
Balance
$
522 O/D
290 X 232 O/D
352 O/D
110 X 242 O/D
110
132 O/D
202 O/D
252 O/D
27
Answers
Bank Reconciliation Statement as at 31 December 2007
Overdraft as per Cash Book
$
199
Less
Bank Lodgement not yet entered
on Bank Statement
103
302
Add
Unpresented Cheque
50
252
28