Anita asks: I have an accounting problem concerning this bank reconciliation. Here is the entire scenario. I need to know how its done...can you help me?
Scenario: balance of $4,000.00
His bank statement showed a balance of $4,270.00
On comparison the following were found:
* check issued amounting to $2,500.00 has not been cashed
* the bank rejected checks amounting to $140.00
* standing order for a staples order of $700.00 was not noted.
* a customer paid $170.00 directly into the bank without any notice to us.
* bank charges of $160.00 were entered in the bank statement only.
* a dividend of $250.00 was paid directly into the bank and not recorded in the cash book
* checks for $1,650.00 were entered into the cash book and deposited in the bank but had not been cleared (deposited)
Prepare a bank reconciliation statement for the month.
What do we know? We know that the closing balance at the bank is $4,270 and the closing cashbook balance is $4,000. Our aim is get the cash book balance reconciled with the bank statement balance.
The first thing to do is enter into the cash book any transactions that are on the bank statement but not in the cash book:-
Current Cashbook balance $4,000.00
Enter the Deposits
* $170.00 customer payment
* $250.00 dividend
which takes the cashbook balance up to $4,420.00
Enter the Withdrawals
* $700.00 standing order for staples
* $160.00 bank charges
* $140.00 rejected check
which takes the cashbook balance down to $3,420
That's all very well, you say, but the bank statement balance is $4,270 and the cashbook is now showing $3,420, so what next?
Here is where the reconciliation actually happens.
In the original scenario we are told that $2,500 had not yet been cashed so it does not show on the bank statement, and the $1,650 has been deposited to the bank but not cleared so the bank has not included it in the balance. We cannot add information to the bank statement (like we did with the cashbook) because obviously the bank has control of that so now we need to do our reconciliation table to sort this out, here it is:-
Add: Outstanding withdrawals
Less: Outstanding deposits
Reconciled : Bank statement balance
Our reconciliation table above does not cause a change to the actual cashbook balances but does help us to rest assured that all our figures are correct. The outstanding withdrawals and deposits will show up on the next bank statement.