CHAPTER 11 BANK STATEMENTS

I.E. UPDATING THE CASH BOOKAND BANK RECONCILAIATION

STATEMENTS

2

R. Delaney

Bank statements

A bank statement is a copy of the bank’s record of a customer’s transactions with the bank. It is sent to the customer periodically by the bank.

This should be compared with the customer’s cash book.

3

R. Delaney

Comparing Bank Statements with Cash Book

When comparing the bank statement with the cash book you should draw up two lists:

1. A list of the items that are in the bank statement that are not in the cash book. This is used to bring the cash book up to date

2. A list of the items that are in the cash book that are not in the bank statement. This is used to draw up the Bank Reconciliation Statement

4

R. Delaney

Example: Question No. 6 page 112

The list of the items that are in the bank statement but not in the cash book– 3rd. Direct Debit ESB, €95 (Dr)– 7th. Paypath €1,000 (Cr)– 9th. Credit transfer €500 (Cr)– 12th. Bank charges €15 (Dr)The debit items are entered on the credit

side of the Cash Correction A/C (Updated Cash Book) while the credit items are entered on the debit side

5

R. Delaney

Cash Correction A/C or Updating the Cash Book

CASH CORRECTION A/C AT 14/09/11

€3,825Correct cash bal14

€500CT9

€15Bank charges12€1,000Paypath7

€95DD ESB3€2,435

Balance as per cash book

1

€3,935€3,935

1st Closing balance as per cash book €2,4353rd. Direct Debit ESB, €95 (Dr)7th. Paypath €1,000 (Cr)9th. Credit transfer €500 (Cr)12th. Bank charges €15 (Dr)

6

R. Delaney

Bank Reconciliation Statement (1)

The list of the items that are in the cash book but not in the bank statement

10th. Cheque No. 3 €35012th. Cheque No. 4 €21514th. Lodgement €1,000

7

R. Delaney

Bank Reconciliation Statement (1)

14th. Lodgement €1,000 10th. Cheque No. 3 €35012th. Cheque No. 4 €215

€3,825Correct cash balance

€565€215Cheque No. 4

€350Cheque No. 3

Less cheques not yet presented

€4,390

€1,000Lodgement of 14th

Plus lodgements not credited

€3,390Balance as per bank statement

8

R. Delaney

Bank Reconciliation Statement (2)

14th. Lodgement €1,000 10th. Cheque No. 3 €35012th. Cheque No. 4 €215

€3,390Balance as per bank statement

€565€215Cheque No. 4

€350Cheque No. 3

Plus cheques not yet presented

€2,825

€1,000Lodgement of 14th

Less lodgements not credited

€3,825Correct cash balance