UNIT 3C MY CLUB 1

BANK RECONCILIATION

• An organisation’s Bank Account balance often differs from the balance shown on the Bank Statement prepared by the bank.

• Why?

UNIT 3C MY CLUB 2

• Cheques paid to creditors who may hold on to them before taking them to the bank days later

• Deposits made into the bank on or near the date the statement is prepared ie too late to be included

• If so, they will be included in the next statement

THINGS THE BANK MAY NOT KNOW YET

UNIT 3C MY CLUB 3

THINGS THE ORGANISATION MAY NOT KNOW YET

• Standing orders and direct debits can be forgotten about but the bank always remembers them

• How much Bank Charges are - until the bank tells them in the statement

• Deposits made straight through the bank rather than to the organisation (BGCs)

UNIT 3C MY CLUB 4

THINGS TO REMEMBER• The Bank Statement and the Bank Account

are a mirror image of each other

ie payments made are recorded in the credit column of the bank account but the bank shows them in the debit column of the statement

receipts are shown in the debit column of the bank account but appear in the credit column of the bank statement

UNIT 3C MY CLUB 5

HOW TO RECONCILE THE TWO• Step 1 Find the differences by ticking off all the

matching items in the bank statement and bank account and circle the items for which there is no match

• Step 2Update the bank account using the circled items in the statement

• Step 3Prepare a bank reconciliation statement using the circled items in the bank account

UNIT 3C MY CLUB 6

STEP 1BANK ACCOUNT

DATE DETAILS DEBIT CREDIT BALANCE01-Apr Opening Balance 286006-Apr Sponsorship 250 311009-Apr Hire of Hotel 600 251018-Apr Donation 20 253026-Apr Rent 120 241027-Apr Subscriptions 800 321028-Apr Secretary Exps 305 290530-Apr Advertising 40 2865

BANK STATEMENT

Treasurer Snappy Camera Club

Date Description Dr Cr Balance

1Ap Op Bal 2860

6” Deposit 250 3110

13” 004223 600 2510

15” DD Bet Ph 60 2450

19” Deposit 20 2470

28” 004256 120 2350

30” Bank Chgs 10 2340

- Finding the Differences

UNIT 3C MY CLUB 7

STEP 2BANK ACCOUNT

DATE DETAILS DEBIT CREDIT BALANCE01-Apr Opening Balance 286006-Apr Sponsorship 250 311009-Apr Hire of Hotel 600 251018-Apr Donation 20 253026-Apr Rent 120 241027-Apr Subscriptions 800 321028-Apr Secretary Expenses 305 290530-Apr Advertising 40 2865

30 Apr DD Better Photo 60 2805 30 Apr Bank Charges 10 2795

- Updating the Bank Account

UNIT 3C MY CLUB 8

STEP 3Snappy Camera ClubBANK RECONCILIATION STATEMENT AS AT 30 APRIL….

Bank Statement Balance £2340Add Items deposited not yet shown:

Subscriptions 800 3140

Less Unpresented Cheques: Secretary’s Expenses 305 Advertising 40 345

Corrected Bank Account Balance 2795

- The Bank Reconciliation Statement

UNIT 3C MY CLUB 9

KEY WORDS

a standing order

a bank giro credit

a direct debit

bank charges

a method of payment for a regular sumto the same person, the same time every month

similar to a standing order but the payee instructs the bank to deduct the amount from your account every month

a payment directly into your bank account

the amount you pay the bank for setting upstanding orders and direct debits.