by s.k chik. introduction at each given date, our banker should send us a statement which shows the...
Post on 18-Dec-2015
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Introduction
• At each given date, our banker should send us a statement which shows the details of our bank transactions during a particular period and the balance at that date. We call this statement the “bank statement”
• Theoretically, our company’s bank account in the cash book column should have the same transactions and balance as recorded by the bank statement.
• The only difference is that the former is prepared by our firm while the latter is done by the banker
• However, in practice, the balance from the bank statement seldom agrees with the balance from the bank account in the cash book.
Reasons for differences
1. Bank interest and commissionThe banker calculates these charges, the amou
nt will first appear on the bank statement and cannot be entered into the cash book until the statement is received.
2. Uncredited ChequesSome cheques that we have received but not y
et deposited or deposited but not yet credited on the bank statement because the cheques have not been ”cleared”
3. Unpresented ChequesCheques issued sent to creditors have been recorded in the cash book but they have not been presented to the bank for payment, so the corresponding entry in the bank statement may not appear until several days later.
4. Autopay – Standing Orders and Direct debitsThe banker pays regular amounts on behalf of our company, this amount paid will first appear on the bank statement at the appropriate date, but may not have been entered in the cash book.
5.Credit transferSometimes debtors may not send us the cheques for settlement but directly deposit money into our bank account. (e.g. EPS) This amount received will first appear on the bank statement and cannot be entered into the cash book until the bank statement is received.
Adjustments
• We should adjust the balance of cash book in order to agree the balance of bank statement
• The difference that cash book has not been entered the transactions of Bank interest, Standing orders, Direct debits, Credit transfer and dishonored Cheques should be adjusted in Cash book
ITEMS
ENTRIES ALREADY MADE ON
CORRECTION REQUIRED ON CASH BOOK
CASH BOOK BANK STATEMENT
1. Unpresented Cheque
Credited Not yet entered
None
2. Uncredited cheque
Debited Not yet entered
None
3. Credit transfer
Not yet entered
Credited debit
4. Standing Order
Not yet entered
Debited Credit
5. Bank Charges
Not yet entered
Debited Credit
6. Dishonored cheque
Debited returned Credit
20X6 $
Jan 30 Mr. A 50
31 Bal c/ d 700
750
20X6 $
Jan 25 Balance b/ f 100
28 Sales 200
31 Sales 500
750
Feb 1 Balance b/ d 700
Cash Book (Bank)
Date
20X6
Jan 25
26
28
30
31
Particulars
Balance b/ f
Cheque #901
Cash deposit (sales)
Cash deposit (Mr. B)
Standing order - rent
Withdrawals (Dr.)
$
30
40
Deposits (Cr.)
$
20
150
Balance
$
130 (Cr.)
100 (Cr.)
120 (Cr.)
270 (Cr.)
230 (Cr.)
Hong Kong Bank LTD.
Gradeplus Co.
Bank Statement
20X6 $
Jan 30 Mr. A 50
31 Bal c/ d 700
750
20X6 $
Jan 25 Balance b/ f 100
28 Sales 200
31 Sales 500
750
Feb 1 Balance b/ d 700
Cash Book (Bank)
Date
20X6
Jan 25
26
28
30
31
Particulars
Balance b/ f
Cheque #901
Cash deposit (sales)
Cash deposit (Mr. B)
Standing order - rent
Withdrawals (Dr.)
$
30
40
Deposits (Cr.)
$
20
150
Balance
$
130 (Cr.)
100 (Cr.)
120 (Cr.)
270 (Cr.)
230 (Cr.)
Hong Kong Bank LTD.
Gradeplus Co.
Bank Statement
Unpresented Cheque (adju
sted)
Overstated $180
Unpresented Cheque
Credit transfer
Uncredited Cheque
Standing Order
Understated balance of $50
20X6 $
Jan 31 Standing Order 40
31 Bal c/ d 860
900
20X6 $
Jan 31 Balance b/ f 700
31 Credit transfer 150
31 Understated balance 50
900
Feb 1 Balance b/ d 860
Cash Book (Bank)
Adjustments
Bank Reconciliation Statement
Balance as per cash book
Add: Unpresented Cheque
Less: Uncredited Cheque
Bank error (understated deposit)
Balance as per bank statement
$
50
500
180
$
860
910
(680)
230
Bank Reconciliation Statement
as at 31 January 20X6
Balance as per bank statement
Add: Uncredited Cheque
Bank error (understated deposit)
Less: Unpresenited Cheque
Balance as per Cash Book
$
500
180
50
$
230
680
910
(50)
860
Bank Reconciliation Statement
as at 31 January 20X6
Instead of commencing with the cash book balance, the bank reconciliation statement can commence with the bank statement balance and end with cash book balance as follows:
At the close of business on 28 February 19X9 the cash book of Mr. Chong showed a balance of $625 in his bank. The figure differed from the bank balance as shown on his bank statement. The following matters account for the difference:
(a) On 28 February 19X9 one of his debtors had paid direct to Mr. Chong’s banking account the sum of $42. This transaction had not been entered in the cash book.
(b) During February 19X9 the bank had allowed Mr. Chong interest amounting to $54 but this had not yet appeared in the cash book.
(c) Certain cheques drawn by Mr. Chong during February 19X9 had not been presented for payment by the close of business on 28 February 19X9. These were for $21, $17. $57 and $61.
(d) A standing order for $75 being one quarter’s rent had been paid by the bank on Mr. Chong’s behalf but this had not yet been entered in the cash book.
(e) During February 19X9, Mr. Chong had paid into his banking account a cheque for $44 which he had received from a debtor’s bank. The appropriate entry appeared on the bank statement but not in Mr. Chong’s cash book.
Example:
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