SESSION 14 – BANK RECONCILIATION STATEMENTS

KAPLAN PUBLISHING 149

Prepare a bank reconciliation statement as at 31 July.

Cash book

Bank reconciliation statement as at 31 July

$

Balance per bank statement

Less: Unpresented cheque

Add: Uncleared lodgement

Balance per cash book

EXAMPLE 4 The following information has been extracted from the records of N. Patel:

Bank account

$ Chq. no. $

1 Dec Balance b/d 16,491 1 Dec Alexander 782 857

2 Dec Able 962 6 Dec Burgess 783 221

Baker 1,103 14 Dec Barry 784 511

10 Dec Charlie 2,312 17 Dec Cook 785 97

14 Dec Delta 419 24 Dec Hay 786 343

21 Dec Echo 327 29 Dec Rent 787 260

23 Dec Cash sales 529

30 Dec Fred 119

31 Dec Balance c/d 19,973

22,262 22,262

CAT PAPER 3 ( INT) – MAINTAINING FINANCIAL RECORDS (MFR)

150 KAPLAN PUBLISHING

High Street Bank

Bank Statement – N. Patel

Date Details Withdrawals Deposits Balance $ $ $

1 December Balance b/f 16,491

5 December 782 857

5 December Bank charges 47 15,587

6 December Deposit 2,065 17,652

10 December Standing order (rates) 137 17,515

11 December 783 212 17,303

13 December Deposit 2,312 19,615

17 December 784 511 19,104

17 December Deposit 419 19,523

23 December Deposit 327 19,850

24 December Deposit 528 20,378

28 December 786 343 20,035

30 December 310923 297 19,738

31 December Balance c/f 19,738

Required:

(a) Update the cash book for December.

(b) Prepare a bank reconciliation statement at 31 December.

(c) Why do we prepare a monthly reconciliation statement?

SESSION SUMMARY These are the steps to completing a bank reconciliation statement:

• Tick off the common entries (tick from the cash book to the bank statement).

• Ensure that the opening balances can be reconciled: If the opening balances do not agree, identify the outstanding items from the previous

month. Establish the first cheque number of the current month – all previous cheque numbers are outstanding cheques. If there is still a difference, look at the first lodgements of the month. Tick off these outstanding items in the bank statement.

• Update the cash book with unticked items on the bank statement.

• Enter outstanding items in the reconciliation statement, i.e. unticked items in the cash book.

• Correct any errors and complete the reconciliation statement.