cash book ( bank column only )
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1
Cash Book ( Bank Column Only )
2006 $ 2006 $
Aug1 Balance b/f 40 Aug11 G.Wong 25Aug10 K.Chan 60 Aug23 H.Chik 45
Aug31 Balance c/f 30100 100
Bank Statement
Aug5 Balance b/f 40 Cr.
2006 Dr. Cr. Balance$ $ $
Aug11 G.Wong 25Aug 10 K.Chan 60 100 Cr.
Example 1~
75 Cr.
2
1. Should the ending balance of the Cash Book and Bank Statement be the same?
2. Why they should be the same?
3. Can you tell me why there is a difference between their ending balances?
3
• Timing differencesE.g. A receipt of $50 from A.Lee on Aug 28 were credited by the bank on Sept 3
• Omissions and Errors
E.g. A payment of electricity fee by the bank of $300 was omitted in the Cash Book
4
( 1 ) Unpresented Cheques• Cheques issued by the firm not presented for payment by the bank.
Cash Book (Bank) 2005 $Dec 31 Furniture 100Dec 31 Furniture 100
Bank Statement
2006 Dr. Cr. Balance$ $ $
Jan 10 Furniture 100 100 Dr
E.g
5
• Deposits entered into the Cash Book but not yet appeared on Bank Statement
Cash Book (Bank)
2005 $Dec 30 Sales 100
Bank Statement
2006 Dr. Cr. Balance$ $ $
Jan 2 Sales 100 100 Cr
E.g
6
• Payments made directly through the bank
Cash Book (Bank) 2006 $Jan 3 Rates 700
Bank Statement
2005 Dr. Cr. Balance$ $ $
Dec 20 Rates 700 700 Dr
E.g
7
•Charges for banking services made by the bank for •the company
Cash Book (Bank)2006 $Jan 3 Bank Charges 20
Bank Statement
2005 Dr. Cr. Balance$ $ $
Dec 25 Bank Charges 20 20 Dr
E.g
8
• Standing instructions from the firm to make regular payments by the bank
Cash Book (Bank) 2006 $Jan 2 subscriptions 300
Bank Statement
2005 Dr. Cr. Balance$ $ $
Dec 10 subscription 300 300 Dr
E.g
9
•Collection from customers made direct to the bank •through the banking system
Cash Book (Bank)
2006 $Jan 2 subscriptions 400
Bank Statement
2005 Dr. Cr. Balance$ $ $
Dec 17 subscription 400 400 Cr
E.g
10
•Cheque deposited into the bank but returned by the bank marked ‘refer to drawer’ ( i.e. the drawer fails to pay )
Cash Book (Bank)
2005 $Dec 7 A.Chan 500
Bank Statement
2005 Dr. Cr. Balance$ $ $
Dec 9 A.Chan 500 500 Cr
E.g
Dec 11 A.Chan 500 0 (Refer to drawer)
11
•Interest received from the bank for deposits or fixed •deposits into the bank
Cash Book (Bank)
2006 $ Jan 2 Interest received 10
Bank Statement
2005 Dr. Cr. Balance$ $ $
Dec 20 Interest received 10 10 Cr
E.g
12
• Explain the reasons for differences
• Identify errors and omissions in the Cash Book and the Bank Statement
•Make corrections
13
Example 2 Cash Book ( Bank Column Only )
20062006 $ 2006 $
Aug1 Balance b/f 40 Aug11 G.Wong 25Aug10 K.Chan 60 Aug23 H.Chik 45
Aug31 Balance c/f 30100 100
Bank Statement
Aug 1 Balance b/f 40 Cr.
2006 Dr. Cr. Balance$ $ $
Aug 11 G.Wong 25 75 Cr.Aug 10 K.Chan 60 100 Cr.
14
Bank Reconciliation Statement as at 31 August 2006
Unpresented cheque : H.Chik 45
Balance in hand as per bank statement 75
Balance in hand as per Cash Book 30
Add
$
Bank Reconciliation Statement as at 31 August 2006
Less: Unpresented cheque :H.Chik 45
Balance in hand as per Cash Book 30
$
Balance in hand as per Bank Statement 75
15
2008 $ 2008 $
Dec26 Balance b/f 500 Dec27 Y. Chan 100Dec28 G.Poon 70 Dec29 C.Cheung 25Dec 31 A.Tang 230 Dec31 Balance c/f 675
800 800
Bank Statement
Dec 26 Balance b/f 500 Cr.
2008 Dr. Cr. Balance$ $ $
Dec 30 Y. Chan 100 470 Cr.Dec 29 Cheque 70 570 Cr.
Exercise1 Cash Book
Credit Transfer: L.Chung 60 530 Cr.Bank Charges 20 510 Cr.
16
Example 3Cash Book ( Bank Column Only )
2006 $ 2006 $Aug27 Balance b/f 400 Aug28 W.Wong 55Aug29 T.Pong 50 Aug30 A.Kong 20Aug30 G.Lee 110 Aug31 Balance c/f 485
560 560
Bank Statement
Aug 27 Balance b/f 400 Cr.
2006 Dr. Cr. Balance$ $ $
Aug 30 W.Wong 55 395 Cr.Aug 29 Cheque 50 450 Cr.
Aug 30 Credit transfer: G.Lau 60 455 Cr.Aug 30 Bank Charges 40 415 Cr.
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What is the amount difference between the Cash Book and the Bank Statement?
Answer : $485-$415=$70
18
Credit Transfer
Bank interest Debit Cash Book(since not yet entered in Cash Book)
Standing Order/ Direct Debit
Bank Charges
Dishonoured Cheques
Credit Cash Book(since not yet
entered in Cash Book)
19
Cash Book
2006 $ 2006 $
Aug 31 Balance b/f 485 Aug 31 Bank charges 40
Aug 31 Credit transfer 60 Aug 31 Balance c/f 505
545 545
20
Bank Reconciliation Statement as at 31 August 2006
$
Balance in hand as per Cash Book 505
Add Unpresented cheque :A.Kong 20
525
Less Uncreditd items 110
Balance in hand as per bank statement 415
21
Bank Reconciliation Statement as at 31 August 2006
$ $
Balance in hand as per Cash Book 485
Add Unpresented cheque :A.Kong 20
Credit transfer : G.Lam 60 80
565 Less
Uncredited items : G.Lee 110
Bank charges 40 150Balance in hand as per Bank Statement 415
22
Bank Reconciliation Statement as at 31 August 2006
$ $
Balance in hand as per Bank Statement 415
AddUncredited items :G.Lee 110
Bank charges 40 150 565
Less Unpresented cheque :A.Kong 20
Credit transfer :A.Lam 60 80
Balance in hand as per Cash Book 485
23
Items Effect on Effect on Adjustment Adjustment Cash Book Bank to Cash to Bank
balance Statement Book Statement balance balance Balance
Unpresented1)
cheque十 一
2)Uncredited
items一
3)Direct debits
十十
一 十一
一
24
Items Effect on Effect on Adjustment Adjustment Cash Book Bank to Cash to Bank
balance Book Statement
4)Bank
charges
5) Standing
orders
一 一
一 一
十
十6)Credit
transfer/ direct
credits
十 十 一
balance balance
25
Dishonoured cheque
8) Interest
allowed by the bank
Items Effect on Effect on Adjustment Adjustment Cash Book Bank to Cash to Bank
balance balance balance
一 一
一
十
十十
7)
26
Bank Overdrafts(Shown by a credit Balance in the Cash Book)
Cash Book
2006 $Nov1 Balance b/f 300
Bank overdraft
Bank Statement
2006 Dr Cr Balance$ $ $
Nov1 Balance b/f 300 O/D
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Example Cash Book2007 $ 2007 $Dec 4 A. Ko X 290 Dec 24 N. Ng X 110Dec 29 M.Ming 110Dec 31 B.Tam 103Dec 31 Balance c/d 199
Dec 1 Balance b/f 522Dec 5 K.Wong 120
Dec 23 D.Fung 50 Dec 29 A.Co 70Dec 31 Bank Charges 50
812 812
Bank Statement
2007 Dr. Cr. Balance
Dec 1 Balance b/f 522 O/DDec 5 Cheque 290 X 232 O/D
K.Wong 120 352 O/DDec 24 Cheque 110 X 242 O/DDec 29 M.Ming: Credit Transfer 110 132 O/DDec 29 A.Co. 70 202 O/DDec 31 Bank Charges 50 252 O/D
$ $ $
28
Answers
Bank Reconciliation Statement as at 31 December 2007
Overdraft as per Cash Book 199$
LessBank Lodgement not yet entered on Bank Statement 103
302
Add
Unpresented Cheque 50
252
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