Bank Reconciliation Statement - Principles Of Accounting
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http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ Bank Reconciliation Statement A bank reconciliation statement is prepared to reconcile the difference in the balances of bank statement received from bank and the cash book prepared by the business Reasons for the difference between cash book (bank column) balance and the bank statement balance. 1. Cheques issued but not yet presented to the bank for payment. 2. Cheques deposited but not collected and credited in the bank statement. 3. Bank charges recorded in the bank statement but not recorded in the cash book. 4. Direct deposits by a customer or debtor into the bank account not recorded in the cash book. 5. Payments made by the bank as per standing order, recorded in the bank statement but not recorded in the cash book. 6. Direct debits in the bank statement only. The format of Bank Reconciliation Statement Bank reconciliation statement as at …………………………………….
/ http://www.principlesofaccounting2.com/ Balance as per updated cash book Add Unpresented cheques :-
xxxxx xxxx (xxxx)
Less Uncredited deposits Balance as per bank statement xxxxxx In case the updated cash book is having a credit balance,(overdraft) the above addition and subtraction will be reversed Key points: Unpresented cheque: A cheque paid by you but not yet passed through the banking system
* The cheque not yet produced to the bank to take money from our a/c
(or)
* The cheque is deposited in his a/c but money not yet transferred from our a/c to his a/c Credit Transfer: (Bank Giro credit) Debtors/ someone directly pay their amount in our bank a/c but we come to know it later. Dividend and interest bank collects: Bank collects dividends and interest from where we have invested our money. Uncredited deposits: (Uncredited Cheques) The cheque received by you but not yet passed through the banking system. (i.e. we receive cheques from customers, and deposit in our bank a/c but the amount of money not yet transferred or added to our a/c) Bank Charges: Bank charges some amount of money for the service it provides to us. It is deducted from our a/c. Standing Order: We give instructions to the bank to pay regular amount of money to whom we have to
http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ pay every month.
Eg: Pay 200 every month to a Society.
Direct debit:
This is also as same as standing order but we give permission to those, whom we have
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Bank Reconciliation Statement - Principles Of Accounting
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to pay, to obtain money directly from our bank a/c. In this case the amount not regular but it may vary from time to time. Eg: Electricity bill, telephone bill. Steps to draw out Adjusted Cash Book and BRS: 01. Check the opening balance of both the Cash book and bank statement to ascertain the two balances are the same. 02. Compare the cash book Dr Column (receipt) with the Cr column of bank statement, tick all common items. 03. Compare the cash book credit column (Payment), with the Dr Column of Bank statement, tick all common items.
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04. All items un tiked in the bank statement will be adjusted in the cash book and all items Un ticked in the cash book will be recorded in the bank reconciliation statement
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Assignment Questions of Bank Reconciliation Statement (1) Vigo’s cash book (bank columns) showed the following entries. Dr.
Cash Book
July 11019 31
Cr. $ 1 450
Balance b/dCashParker Cash
500
$ July
SinghRobinsonKings
71624
920 480
260
220
200 The following bank statement was received by Vigo. Date July 11012
Details Balance b/fCashSingh
19
Parker
480
260
1 950
Robinson
260
25
1 030
21
Withdrawn$ Paid in$ Balance$ 920 500 1 450
http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ 20
1 290
22
Dishonoured cheque – Parker
25
Dividend
810
31
Bank charges
550 575
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555
REQUIRED (a) Calculate the cash book balance on 31 July. Prepare and update the cash book. Bring down the balance. (b) Prepare a bank reconciliation statement to reconcile the adjusted cash book balance with the bank statement balance at 31 July 2004. (c) Explain how the cash book is both a book of prime entry and a ledger account.
(2)
Murray’s Cash Book (bank columns) for May 2001 was as follows:
http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ Dr.
Cash Book
May11526
$ 1 200July
31
Balance b/dCashCurry Cash
Cr.
$
540
KlerkLeeGupta
51925 450
180
120
100
150
The following bank statement was received by Murray in early June. Date
Details
Payments
Receipts
Balance
May 1
Balance b/f
$ 540
$ 160
$ 1 040
1
Bank error corrected –contra 30 April
180
450
1 200
15
Cash
120
120
1 650
16
Klerk
170
180
1 110
22
Lee
930
26
Curry
1 050
30
Unpaid cheque — Curry
930
30
Dividend
1 110
31
Bank service charges
940
/ http://www.principlesofaccounting2.com/ You may assume that the bank balance was successfully reconciled at the end of April. Required: (a) Bring the Cash Book up to date, starting with the present balance at 31 May 2001. (b) Prepare a statement, under its correct title, to reconcile the difference between your amended Cash Book balance and the balance in the bank statement on 31 May 2001. (c) State the amount of the bank balance which would appear in Murray’s Balance Sheet as at 31 May 2001.
(3) Mr. Rahim’s Cash Book (Bank columns only) for the month of October 2007 was follows. Dr.
as
Cr. $ Oct 1
Balance 4
16 24 25
b/dCashSutton
$ 120
800 Oct 2 UnwinThompsonMorgan 300
10
Petty Cash
1 025
Cash
220
23
Balance c/d
360
Dobie
70
26
50
Cash
80
31
15
100
31
1 570
1 570
====
====
http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ The following bank statement was received in early November2007. Date1993
Details
Payments $
Oct
114
Balance b/fError corrected –contra 30
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Receipts
$
$ 120
Balance
100
700
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Bank Reconciliation Statement - Principles Of Accounting
8
SeptemberCash
10
Unwin
16
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105
300
800
1 025
220
1 100
Banker’s Order –Fire Insurance
50
70
980
17
Cheque
80
80
24
Thompson
25
Cash
875
80
1 095 70
26
Cheque
140
28
Petty Cash
220
31
Unpaid Cheque – Dobie
170
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90
Interest on Deposit a/c
170
Required: (a) Bring the Cash Book up to date, starting with the present balance of $15 brought forward on 31 October 2007. (There is no need to copy down the whole Cash Book as shown above). (b) Prepare a statement, under its correct title, to reconcile the difference between your amended Cash Book balance and the balance in the bank statement on 31 October 2007. (c) State the amount of the bank balance which would appear in Dean’s Balance Sheet for 31 October 2007.
(4)
Kylie Johnson’s cash book (bank columns) had a debit balance of $460 on 30
April 2006. Use
The bank statement at the same date showed that Kylie had a balance at the bank of $323. On checking the cash book against the bank statement the following differences were found. 1 book
A debtor, Nancy Tan, paid $80 directly into the bank. This had not been
recorded in the cash
2 Bank charges, $50, were included on the bank statement but had not been the cash book.
recorded in
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Insurance paid, $32, was recorded on the bank statement but not in the cash
4
A cheque, $140, sent to a creditor had not yet been presented to the bank
book.
for payment.
5 A transfer of $125 from the business bank account to Kylie’s private bank been entered in the cash book but not on the bank statement. 6
An amount of $400 paid into the bank on 29 April did not appear on the
account had bank statement.
REQUIRED (a) Starting with the balance on 30 April 2006, update the cash book and bring down the amended balance. (b) Prepare the bank reconciliation statement to reconcile the adjusted cash book balance Use with the bank statement balance at 30 April 2006 (c) Explain how the following would appear in the ledger accounts of Kylie Johnson: (i) Bank overdraft; (ii) Short term loan from the business to Kylie Johnson. (5) Sally Major’s cash book (bank column) had a debit balance of $619 on 31 July statement balance on 31 July 2009 was $1594 credit. After checking the cash book against the bank statement the following differences
2009. The bank were found:
1 A cheque for $710 issued to Jon Fletcher had not been presented to the for payment. 2
An amount of $1150 paid into a local bank branch by Sally did not appear on the bank statement.
3
Bank charges of $170 were shown on the bank statement, but had not been recorded in the cash book.
4 Dividends received, $80, were shown on the bank statement but had not recorded in the cash book. 5
bank
been
A payment of $5 cash for travel expenses had incorrectly been credited in the bank column of the cash book.
6 The bank statement showed a bank loan for $1500 had been transferred into the bank current account. Sally Major was not expecting this transfer to take place until 1 August and had not yet recorded the transaction in her books.
http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ Prepare the updated cash book and the bank reconciliation statement Bank Reconciliation Statement.
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MCQ 01. A cheque paid by you, but not yet passed through the bank system is,
A. A standing order. B. A dishonoured cheque C. A credit transfer D. An unpresented cheque
02. Over draft in the bank statement is highlighted by
http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ A. Debit balance
B. Credit balance C. Nil balance D. Debit and credit balance
03. Dishonoured Cheques are recorded in the
A. Adjusted cash book-credit side B. Adjusted cash book-debit side C. Added to bank statement balance D. Deducted from bank statement balance
04. Bank reconciliation statement is drawn to reconcile
A. Cash book with Bank Account Column of Cash book
/ http://www.principlesofaccounting2.com/ B. Cash at bank account with bank statement C. Cash Book and ledgers D. The bank statement
05. In adjusting the cash balance, which of the following is not taken into account?
A. Mistakes in the cash book B. Errors of last month corrected in the bank statement C. Interest and dividend credited in bank statement D. Salaries paid by bank
06. A bank overdraft is best described as
A. A firm wasting its money B. Having more receipts than payments C. A firm having bought too many goods D. A firm having paid more out of its bank account than it has put in it
07. Bank reconciliation statement is prepared by
A. Bankers B. Accountant of the business C. Auditors D. Owners of the business
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A. A standing order. B. A dishonoured cheque C. Bank lodgments not yet credited D. An unpresented cheque
09. The cheques which are issued for payments, but not taken into the bank for payment are
A. Uncredited cheques B. Unpresented cheques
http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ C. Uncleared cheques
D. Dishonoured cheques
10. A business maintains a two column cash book. At 1st June, the debit balance of the bank column was $ 500. Transaction during June were:
Cheques banked Cheques drawn for cash
$ 120, $
50.
What was the debit balance of the bank column at the end of June?
A. $ 330 B. $ 430 C. $ 570 D. $ 670 11. The table shows extracts from a business’s bank reconciliation statement.
/ http://www.principlesofaccounting2.com/ $
Cash book balance in hand at 31 December Balance per bank statement at 31 December
Bank charge per bank statement not entered in cash book Outstanding cheques not presented at the year end2075 2250 150 325
What is the bank balance to be shown in the financial statement?
A. $ 1600 B. $ 1925 C. $ 2075 D. $ 2225
12. Of all the items given, which would be added when attempting reconciliation starting with the cash book?
A. Cheque not credited by the bank B. Bank charges C. Cheques not presented for payment at the bank D. Items that cause the cash book balance to be larger than that shown on the bank statement
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13. A cash book has separate column for bank and cash transaction. At 1st March, the balance on the
cash account was $ 200. Transaction during March were,
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Bank Reconciliation Statement - Principles Of Accounting
Cash banked Cheque drawn for cash
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$ 30 $ 70
What was the balance on the cash account at end of March?
A. $ 100 B. $ 160 C. $ 170
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14. Which statement is sent by the bank to its customers i.e. business to verify the balance at bank, at the end of the month?
A. Bank statement B. Statement account C. Cash statement D. Bank reconciliation statement
15. Cheques given by debtors not honored by their banks are,
A. Uncredited cheques B. Unpresented cheques C. Standing order D. Dishonoured cheques
/ http://www.principlesofaccounting2.com/ 16. Unpresented cheques are added to the
A. Bank statement balance in the reconciliation statement B. Overdraft in adjusted cash book C. Adjusted cash book balance D. Opening balance of the cash book 17. On 20th May 2006, S.Fusna’s bank statement shows a balance of $ 1750, but the cash book shows a balance of $ 2500. Fusna finds cheques totaling $ 750 have not been banked. Which bank balance figure will appear in Fusna’s balance sheet on 31th May 2006? A. $ 1000 B. $ 1750 C. $ 2500 D. $ 3250
18. S.Vaseem receives a bank statement, which does not agree with his book balance. Which of the following is not responsible for this difference?
A. Cheques paid in, have not been credited B. The bank has charged overdraft interest C. A cheque sent to supplier has not been presented D. Furniture purchased for cash 19. Bank reconciliation statement can be defined as one which,
http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ A. is sent by bank to their customers
B. is sent by banks to customers, who exceeds their agreed credit limit with the bank
C. explains the difference between bank balance of cash book, and its bank statement
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D. None of the above
20. Cheques issued six month ago,
A. Should be included in the Bank reconciliation statement B. Should be shown in the balance sheet under the heading accrual’s C. Should be cancelled D. Are stale cheques 21. Which one of the following does not create a difference between the bank balance of the firm
http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ and the balance shown by the bank statement?
A. Errors made by the firm’s bank B. Cheques written by the firm which have not yet appeared on its bank statement C. Lodgments made by the firm which have not yet appeared on its bank statement D. None of the above
22. Bank reconciliation statement is prepared to,
A. Record receipts and payments B. Equalize the cash book balance and bank statement balance C. Record banking transactions D. None of the above
24. A cash book (bank Column) showed a balance of $ 1973 (credit) at 31st March the following items did not appear in the bank statement at that date.
/ http://www.principlesofaccounting2.com/ Unpresented cheques
$ 942
Cheques banked
$ 865
What was the balance on the bank statement at 31st March?
A. $ 1896 (credit) B. $ 1896 (credit) C. $ 2050 (debit) D. $ 2050 (debit) Incoming search terms:
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