On Aug 14th, One of our Partner's ( Compuville ) cash book showed a debit balance of $4,000.00.
His bank statement showed a balance of $4,270.00.
On comparison the following were found:
* check issued amounting to $2,500.00 has not been cashed
* The bank rejected checks amounting to $140
* Standing order for a staples order of $700 was not noted.
* A customer paid $170 directly into the bank without any notice to Us
* Bank charges of $160 were entered in the bank statements only.
* A dividend of $250 was paid directly into the bank and not recorded in the cash
book
* Checks for $1,650.00 were entered into the cash book and deposited in the bank
but had not been cleared (deposited).
Prepare a bank reconciliation statement for the month .
To prepare a bank reconciliation statement, you need to compare the cash book balance with the bank statement balance and consider the items that are causing the differences. Here's how you can do it step-by-step:
Step 1: Start with the cash book balance.
Cash book debit balance: $4,000.00
Step 2: Note the items that will increase the cash book balance:
- Check issued amounting to $2,500.00 has not been cashed.
Step 3: Calculate the revised cash book balance:
Cash book balance: $4,000.00
Add: Outstanding check ($2,500.00)
Revised cash book balance: $6,500.00
Step 4: Note the items that will decrease the cash book balance:
- The bank rejected checks amounting to $140.
- Standing order for a staples order of $700 was not noted.
- A customer paid $170 directly into the bank without any notice to us.
- Bank charges of $160 were entered in the bank statements only.
- A dividend of $250 was paid directly into the bank and not recorded in the cash book.
Step 5: Calculate the adjusted cash book balance:
Revised cash book balance: $6,500.00
Less: Rejected checks ($140.00)
Less: Missed standing order ($700.00)
Less: Unnoticed customer payment ($170.00)
Less: Bank charges ($160.00)
Less: Unrecorded dividend ($250.00)
Adjusted cash book balance: $5,080.00
Step 6: Note the items that will increase the bank statement balance:
- A customer paid $170 directly into the bank without any notice to us.
- Bank charges of $160 were entered in the bank statements only.
- A dividend of $250 was paid directly into the bank and not recorded in the cash book.
Step 7: Calculate the adjusted bank statement balance:
Bank statement balance: $4,270.00
Add: Unnoticed customer payment ($170.00)
Add: Bank charges ($160.00)
Add: Unrecorded dividend ($250.00)
Adjusted bank statement balance: $4,850.00
Step 8: Note the items that will decrease the bank statement balance:
- Check issued amounting to $2,500.00 has not been cashed.
- Checks for $1,650.00 were entered into the cash book and deposited in the bank but had not been cleared (deposited).
Step 9: Calculate the final adjusted bank statement balance:
Adjusted bank statement balance: $4,850.00
Less: Outstanding check ($2,500.00)
Less: Uncleared checks ($1,650.00)
Final adjusted bank statement balance: $700.00
Step 10: Prepare the bank reconciliation statement:
Cash book balance: $5,080.00
Bank statement balance: $700.00
Add: Outstanding check ($2,500.00)
Add: Uncleared checks ($1,650.00)
Bank reconciliation balance: $4,850.00
The bank reconciliation statement for the month shows that the adjusted balance in the cash book is $5,080.00, while the adjusted balance in the bank statement is $700.00. These balances can be reconciled by considering the outstanding and uncleared checks.
To prepare a bank reconciliation statement, we need to compare the cash book balance with the bank statement balance and make adjustments for any discrepancies. Let's go through the given information step by step and make the necessary adjustments:
1. Start with the cash book balance: $4,000.00 (debit balance).
2. Add checks issued but not cashed: $2,500.00. These checks are already deducted from the cash book balance but are not yet cleared by the bank, so we need to add them back.
New cash book balance: $4,000.00 + $2,500.00 = $6,500.00.
3. Deduct rejected checks: $140. These checks were deducted from the cash book balance but were not accepted by the bank, so we need to deduct them.
New cash book balance: $6,500.00 - $140.00 = $6,360.00.
4. Deduct standing order not noted: $700. This payment should have been recorded in the cash book but was missed, so we need to deduct it.
New cash book balance: $6,360.00 - $700.00 = $5,660.00.
5. Add customer deposit not noticed: $170. This amount was directly deposited into the bank but not notified to you. We need to add it to the cash book balance.
New cash book balance: $5,660.00 + $170.00 = $5,830.00.
6. Deduct bank charges: $160. These charges were recorded only in the bank statement, so we need to deduct them.
New cash book balance: $5,830.00 - $160.00 = $5,670.00.
7. Deduct dividend paid directly into the bank: $250. The dividend was not recorded in the cash book, so we need to deduct it.
New cash book balance: $5,670.00 - $250.00 = $5,420.00.
8. Deduct checks entered but not cleared: $1,650.00. These checks were entered in the cash book and deposited in the bank but have not yet cleared. We need to deduct them.
New cash book balance: $5,420.00 - $1,650.00 = $3,770.00.
Now we have the adjusted cash book balance of $3,770.00.
9. Compare the adjusted cash book balance with the bank statement balance: $4,270.00.
Adjusted cash book balance: $3,770.00
Bank statement balance: $4,270.00
10. Calculate the difference between the adjusted cash book balance and the bank statement balance:
Bank statement balance - Adjusted cash book balance: $4,270.00 - $3,770.00 = $500.00.
The difference of $500.00 represents the items that are still not reconciled between the cash book and the bank statement.
11. Prepare the bank reconciliation statement:
Cash book balance: $3,770.00
Add: Outstanding checks: $1,650.00
Less: Bank charges: $160.00
Adjusted cash book balance: $5,260.00
Bank statement balance: $4,270.00
Difference: $500.00 (unreconciled items)
So, the bank reconciliation statement for the month shows an unreconciled difference of $500.00.