Financial accounting 1
Bank reconciliation
What is bank reconciliation?
• Analysis and adjustment of differences between the cash balance shown on a bank statement, and the amount shown in the account holder's records. This matching process involves making allowances for checks issued but not yet presented, and for checks deposited but not yet cleared or credited. And, if discrepancies persist, finding the cause and bringing the records into agreement.
Two opposite sides
Book
debit
Bank
debit
Book
credit
Bank
credit
Illustration• Apple Corporation has the following information for the month ended June 30, 2015:
Cash balances per bank statement, June 30, 2015 ₱249,223.00
Cash balance per company records, June 30, 2015 248,758.80
The bank statement disclosed the following information:
1. A customer note for ₱ 24,000 plus ₱ 240 interest was collected on June 30, 2015.
2. A customer check for ₱ 2,762.80 was returned because of insufficient funds (NSF check).
3. The month service charge was ₱ 300.
ContinuationA review of the company record disclosed the following:
1. A deposit for ₱ 22,857.40 mailed to the bank on June 29, 2015 did not appear on the bank statement.
2. Customer checks totaling ₱ 6,548.00 were on hand at the end of June awaiting deposit.
3. The following company checks were outstanding at the end of June:
#862 ₱ 1,923.80 #864 ₱ 2,943.60 #865 ₱ 5,265.00
4. Check #843 written for ₱ 1,824.00 in payment of a creditor account and included with the canceled checks in the bank statement has been erroneously recorded as ₱ 384 in the company records
Take notes!
Book reconciling items
1. Credit memos. Note collected by bank and interest income
2. Debit memos. Bank service charge and NSF check
3. Errors. Erroneous recording of check #843
Bank reconciling items
1. Deposit in transit. Cash on hand awaiting for deposits and cash already deposited but too late to appear in bank statement.
2. Outstanding checks. Checks issued to payees by not yet presented to bank for encashment.
3. Errors. Erroneous bank debit and credit.
Bulacan CorporationBank reconciliation
June 30, 2015Balance per books 248.75
8.80
Add: Note collected by bank 24,000.
00
Interest income
240.00 24,240.00
Total 272,998.80
Deduct: Bank service charge 300.00
NSF check returned
2,762.80
Error I recording check #843 1,440.0
04,502.8
0
Adjusted cash balance per book
268,496.00
Balance per bank statement
249,223.00
Add: Deposit in transit
22,857.40
Checks on hand
6,548.00
29,405.40
Total
Deduct: Outstanding checks
#862 1,923.80
#864 2.943.60
#865 5,265.00
10,132.40
Adjusted cash balance per bank
268,496.00
Accounting tutorial
Accounting is an art that cannot be easily understood. For the past 2 years of my teaching experience, I observed many accountancy and non-accountancy students got problem in studying accounting subjects.
About the tutorHe graduated from Kolehiyo Ng Subic on April
2013. On the same year, he took and passed October Certified Public Accountant (CPA) board examination by SELF-REVIEW! He got an average grade 86.71%. In 2015, he passed CAT level 1 examination given by National Institute of Accounting Technician; thus, earning a title Member of Institute of Certified Bookkeeper in London (MICB). He is currently practicing his profession in Academe area. He believe, with proper discipline and attitude, everyone has an equal chance of passing and even topping CPA examination.
Subjects offered1. Basic accounting.
2. Partnership and corporation accounting.
3. Financial accounting 1, 2, and 3.
4. Advanced accounting 1 and 2.
5. Cost accounting 1 and 2.
6. Taxation 1 and 2.
7. Obligations and contracts.
• CPA Board subjects1. Practical accounting 1 and 2
2. Auditing problems
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