CDA COLLEGECDA COLLEGE

ACC101: BOOK KEEPING IIACC101: BOOK KEEPING II

Lecture 10Lecture 10

Lecturer: Kleanthis Zisimos Lecturer: Kleanthis Zisimos

Lecture Topic ListLecture Topic List

Bank Reconciliation statementBank Reconciliation statement

Quick review on Bank accountQuick review on Bank account

What is a bank account?What is a bank account? Is it a current asset or a fixed asset?Is it a current asset or a fixed asset? Debit or credit side?Debit or credit side? Recording transactions to the bank Recording transactions to the bank

accountaccount

What is a bank reconciliationWhat is a bank reconciliation

A bank reconciliation is a comparison of a A bank reconciliation is a comparison of a bank statement (sent monthly from your bank statement (sent monthly from your bank) with the bank account in the books bank) with the bank account in the books of the company.of the company.

The bank reconciliation is needed in order The bank reconciliation is needed in order to identify and adjust the differences to identify and adjust the differences between the two statements between the two statements

Discussion example on the boardDiscussion example on the board

Differences between Bank Differences between Bank statement and Bank accountstatement and Bank account

Differences between Bank statement and Differences between Bank statement and Bank account may occur due to the Bank account may occur due to the following reasonsfollowing reasons

1.1. Unpresented checks Unpresented checks

2.2. Uncleared depositsUncleared deposits

3.3. Bank charges or interestsBank charges or interests

4.4. Errors in recording a transactionErrors in recording a transaction

Bank reconciliation statementBank reconciliation statement

The bank reconciliation statement is computed The bank reconciliation statement is computed for the correction of errors and adjustment of for the correction of errors and adjustment of the differences. It has the following formthe differences. It has the following form

PART 1PART 1

Bank statement amount X Bank statement amount X

Less: Unpresented checks (X) Less: Unpresented checks (X)

Add. Uncleared deposits XAdd. Uncleared deposits X

XX

Bank reconciliation statementBank reconciliation statement

The results from part 1 should be equal with The results from part 1 should be equal with the results of part 2the results of part 2

PART 2PART 2

Bank account amount X Bank account amount X

Less: Bank charges or interests Less: Bank charges or interests (X) (X)

Adjustment of errors XAdjustment of errors X

XX

Discussion ExerciseDiscussion Exercise On 31 March 2010 the company’s bank account showed On 31 March 2010 the company’s bank account showed

a debit balance of a debit balance of € 5000. The bank statement of March € 5000. The bank statement of March which was sent by the bank had a credit balance of 5600 which was sent by the bank had a credit balance of 5600 . Make the bank reconciliation statement noting the . Make the bank reconciliation statement noting the following pointsfollowing points

1.1. Bank charges € 200 were not recorded in the booksBank charges € 200 were not recorded in the books

2.2. A check for € 1000 was not shown in the bank statem.A check for € 1000 was not shown in the bank statem.

3.3. A check deposit was not cleared in the bank for 500 A check deposit was not cleared in the bank for 500

4.4. A check for € 400 was not shown in the bank statem.A check for € 400 was not shown in the bank statem.

5.5. A check payment of 100 to a supplier was wrongly A check payment of 100 to a supplier was wrongly recorded to the books of the company as a cash recorded to the books of the company as a cash paymentpayment