014ffbrs(module2)

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Amity Business School

Bank Reconciliation Statement Bank Reconciliation statement is a statement prepared mainly to reconcile thedifference between the Bank Account shown by the Cash Book and Bank Pass Book.

- Patil

Causes of difference between cash book and pass book balance

Cheque issued but not yet presented for payment in the bank

Cheque paid into the bank for collection but not yet credited by the bank Cheque paid into the bank for collection but dishonored by the bank

Interest allowed by the bank

Interest charged by the bank on overdraft

Bank charges and commission charged by the bank

Direct deposit by customers into the bank.

Interest and dividend collected by the bank

Direct payment made by the bank on behalf of customers

Any wrong entry made by the bank in the pass book

Other reasons


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Preparation of Bank Reconciliation Statement

A bank reconciliation statement can be prepared by taking the balance either as percash book or as per pass book as a starting point. If the statement is started with the

balance as per bank column of the cash book, the answer arrived at in the end will be

the balance as per pass book.

Methods of preparing Bank Reconciliation Statement by Debit Balance of BankColumn of Cash Book

(A) Items to be added:-

Cheques issued but not yet presented for payment

Credit made by the bank for interest Amount directly deposited by the customers in out bank account

Interest and dividend collected by the bank

Cheques paid into the bank but omitted to be recorded in the cash book


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(B) Items to be deducted:-

Cheques sent to the bank for collection but not yet credited by the bank

Cheques sent to the bank for collection but dishonored the bank.

Direct payment made by the bank on behalf of customers

Debits made by the bank for Commission, Bank Charges etc

Cheques issued but omitted to be recorded in the cash book

Example 1:

On 31st March 1994, the bank balance as per Rajesh Chauhans cash book was Rs. 17,280

Debit. On comparing the Cash book with the Pass book following differences were

found:

1. Cheques for Rs. 8,400 sent for collection have not been cleared by the bank as far.

2. Cheques issued but not yet presented for payment Rs. 5,600.

3. There is a debit of Rs. 80 in the pass book for bank charges, but not recorded in the cash

book

4. Bank has credited Rs. 240 for interest in the pass book but these are also not recorded in

the cash book.

5. A customer deposited Rs. 2,000 direct in the bank but these were recorded only in Pass

Book.


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6. According to standing orders of Rajesh Chauhan, the bank has made the

following payments by debiting his account:-

Club Fees Rs. 500

Life Insurance Premium Rs. 2,500

These are not recorded the Cash Book.

Prepare a Bank Reconciliation Statement as on 31st March 1994.

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