BANK RECONCILIATION
DEFINITION OF 'BANK RECONCILIATION STATEMENT'
A form that allows individuals to compare their personal bank account records to the bank's
records of the individual's account balance in order to uncover any possible discrepancies. Since
there are timing differences between when data is entered in the banks systems and when data is
entered in the individual's system, there is sometimes a normal discrepancy between account
balances. The goal of reconciliation is to determine if the discrepancy is due to error rather than
timing.
Bank Statement
Adjustments must be made to the cheque book balance
Items
Credit Memo (CM) An addition to your bank balance
Debit Memo (DM) A subtraction from your bank balance
Notes collected Bank collects money on your behalf (increase)
Interest earned Bank pays you interest based on your account balance (increase)
Fees the bank charges for various services such as cheque printing
Service charges
(decrease)
Non-sufficient funds A deposited cheque written to you that is not supported with the
(NSF) required funds (decrease)
ATM withdrawals Withdrawals made from an automated teller machine (decrease)
Bank errors A transaction processing error (decrease/increase)
Cheque book Items Adjustments must be made to the bank statement
Deposits you made that were not processed by the bank prior to the
Deposits in transit
preparation of the bank statement (increase)
Outstanding Cheques you have written that have not been cashed by the payee
cheques (decrease)
Bank errors A record-keeping error (decrease/increase)
Page 1 of 5
Problem 01: On comparison of Cash Book (bank column) and the bank statement of Aslam
Traders for the month of July 2009 revealed the following:
(a) Balance as per bank statement Rs.57,000 and balance as per cash book Rs.43,000.
(b) Cheques issued during july 2009, but not presented Rs.15,000.
(c) Bank charges not entered in cash book Rs.500.
(d) Locker rent debited by bank, but not entered in cash book Rs.3,500.
(e) Profit credited Rs.1,500 and Tax debited Rs.150 by bank not recorded in cash book.
(f) Cheques deposited on july 30, 2009 not shown in bank statement Rs.5,000.
(g) Direct deposit by a customer Rs.6,650 not entered in the cash book.
Required: Prepare bank reconciliation statements as on July 31, 2009.
Problem 02: On comparison of Cash Book (bank column) and the bank statement of Rizwan
Corporation for the month of January 2009 revealed the following:
(a) Balance as per bank statement Rs.9,000 and balance as per cash book Rs.24,000.
(b) Late deposits not shown in the bank statement Rs.8,000.
(c) Outstanding cheques Rs.2,200.
(d) Direct deposits by a customer not recorded in the cash book Rs.3,000.
(e) Dishonored cheque Rs.14,000.
(f) Profit credited by bank, but unrecorded in cash book Rs.2,000.
(g) Withholding tax debited by bank , not recorded in cash book Rs.200.
Required: Prepare bank reconciliation statements as on January 31, 2009.
Problem 03: the information listed below is available in reconciling bank balance for SONA
CHANDI Co. on December 31, 2013.
(a) The bank statement at December 30, indicated a balance of Rs.10,034.70, however Bank
column of cash book showed a balance of Rs.12,761.94.
(b) Cash receipt of Rs.5,846.20 deposited into bank at December 31, did not appear among
the deposits.
(c) Out of the cheques issued in December two cheques amounted to Rs.1,938.56 were not
among the paid cheques.
(d) A service charge for Rs.40 by error deducted by bank from the account of SONA
CHANDI Co. instead of CHANDI Co.
(e) A cheque for Rs.220 returned by bank marked as NSF cheque.
(f) The paid cheque by bank disclosed an error that a cheque of Rs.504 had been recordedas
Rs.50.40 in cash book.
(g) A debit memo of Rs.10 was enclosed bank statement for issuance of cheque book.
(h) On December 31, the Co. received a memorandum from bank indicating that the noe of
Rs.1,904 had been collected.
Page 2 of 5
Required: Prepare bank reconciliation statement and adjusting entries for SONA CHANDI Co.
Problem 04: on comparison of cash and bank records of M/[Link] AND AFZAL,
revealed the following information on 31st July 2007:
(a) Balance as per cash book Rs.13,579 and as per bank record Rs.1,019.
(b) Three cheques amounting to Rs.1,300, Rs.3,100 and Rs.4,400 were issued to the
suppliers. Only first two cheques were presented to the bank till the last day of the month.
(c) Accompanying the bank statement was the cheque of NIZAM BROS. for Rs.5,000.
Marked as NSF.
(d) Bank statement showed a debit of Rs.510 and Rs.150 for ZAKAT deduction and charges
for collection respectively.
(e) Collection of dividend Rs.600 by bank and note receivable of Rs.2,800 were not recorded
in the cash book.
(f) A cheque of Rs.7,300 issued to Salman Paracha for purchase of office furniture was
entered by cashier as Rs.3,700 in the cash book.
(g) Four cheques of Rs.12,400 were sent to bank for collection but only one cheque of
Rs.4,200 was collected and credited by bank.
(h) The bank statement showed payment of Rs.1,200 as insurance premium and a note
payable of Rs.3000, but cash book lacks this record.
(i) A cash deposit of Rs.6,000 into bank has erroneously been recorded by the firm’s cashier
as Rs.600.
(j) Late deposit of Rs.7,200 on the last day did not appear in the bank statement.
Required: Prepare a bank reconciliation statement on 31st July 2007. Also pass necessary
adjusting entries in general journal.
Problem 05: VIGO’S cash book (bank columns) showed the following entries.
Date Particulars Bank Date Particulars Bank
$ $
1-Jul Balance b/d 1,450 7-Jul Sing 920
10 cash 500 16 Robinson 480
19 Parker 260 24 King 220
31 cash 200
Page 3 of 5
The following statement was received by VIGO.
Date Details Withdrawals Deposits Balance
$ $ $
1-Jul Balance b/d 1,450
10 Cash 500 1,950
12 Singh 920 1,030
19 Parker 260 1,290
21 Robinson 480 810
22 Dishonored cheque-Parker 260 550
25 Dividend 25 575
31 Bank charges 20 555
Required:
(a) Calculate the cash book balance on July 31 st.
(b) Prepare a bank reconciliation statement.
(c) Prepare necessary adjusting entries.
Problem 06: Murray’s Cash Book (Bank columns) for May 2011was as follows:
Date Particulars Bank Date Particulars Bank
$ $
1-May Balance b/d 1,200 5-May Klerk 540
15 cash 450 19 Lee 180
26 Curry 120 25 Gupta 100
31 cash 150
The following Bank statement was received by Murray in early June.
Date Details Payment Receipts Balance
$ $ $
1-May Balance b/d 1,040
1 Bank error corrected- contra April 30 160 1,200
15 Cash 450 1,650
16 Klerk 540 1,110
22 Lee 180 930
26 Curry 120 1,050
30 Unpaid cheque- Curry. 120 930
30 Dividend 180 1,110
31 Bank service charges 170 940
Page 4 of 5
Required:
(a) Calculate the cash book balance on July 31 st.
(b) Prepare a bank reconciliation statement.
(c) Prepare necessary adjusting entries.
Page 5 of 5
