Examples of Bank Reconciliation Statement Illustration 1, From the following particulars prepare a Bank Reconciliation Statement on 31st January XXXX Debit Balance as per Cash Book 48,000. Cheque of 37,000 was deposited and collected by the bank but not recorded in Cash Book. Purchased Furniture andRead more
Examples of Bank Reconciliation Statement
Illustration 1,
From the following particulars prepare a Bank Reconciliation Statement on 31st January XXXX
- Debit Balance as per Cash Book 48,000.
- Cheque of 37,000 was deposited and collected by the bank but not recorded in Cash Book.
- Purchased Furniture and payment by the debit card 25,000, was not recorded in Cash Book.
- A cash deposit of 26,000 was recorded in the cash column of Cash Book.
Solution:
Illustration 2,
From the following particulars prepare a Bank Reconciliation Statement on 31st October XXXX
- Pass Book of Ms Jane shows an overdraft of 50,000.
- Cheques issued but not presented for payment to bank 40,000.
- Payment side, bank column of Cash Book was undercast by 500.
- Interest on overdraft charged by the bank was 1,500.
Solution:
Examples of Cash Book
Illustration 1,
| Date | Particulars | Amount |
| 1st March XXXX | Cash in Hand | 2,500 |
| 5th March XXXX | Cash paid to Mr Allen | 1,000 |
| 16th March XXXX | Cash Sales | 1,500 |
| 25th March XXXX | Paid Salary | 500 |
Solution:
Illustration 2,
Prepare a 2 column cash book
| Date | Particulars | Amount |
| 1st Oct XXXX | Bank Balance | 52,000 |
| 1st Oct XXXX | Cash Balance | 15,000 |
| 4th Oct XXXX | Purchased goods and payment made by cheque | 15,000 |
| 16th Oct XXXX | Sold goods for cash | 8,000 |
| 25th Oct XXXX | Paid rent by cheque | 500 |
| 26th Oct XXXX | Purchased goods for cash | 10,000 |
Solution:
Aastha Mehta.
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Objectives of Bank Reconciliation Statement- Bank Reconciliation statement refers to the statement that reconciles the difference between the balances as per the bank column of cash-book and pass-book. The following are the objectives of the bank reconciliation statement. BRS Stands for Bank ReconcRead more
Objectives of Bank Reconciliation Statement-
Bank Reconciliation statement refers to the statement that reconciles the difference between the balances as per the bank column of cash-book and pass-book. The following are the objectives of the bank reconciliation statement. BRS Stands for Bank Reconciliation Statement.
1. The primary objective for preparing BRS is to check the accuracy in the bank column of both cash book and passbook. Accountants generally prepare BRS based on transactions recorded in the cash book and bank book (passbook) on a particular time.
2. BRS is prepared to check the cash inflows and outflows in the business and they must tally with the bank statements (or) passbook. This helps the users to easily detect the non-uniformity in cash book balance and passbook balance.
3. BRS provides us information on the various aspects of banking transactions such as it gives information on the position of cheques, payment made by the bank on standing instructions, direct payment by debtors, bank charges, bank interest, dividends received etc.,
4. BRS helps the accountant to keep a track on the funds available in the bank account. Hence it becomes comfortable for the company to issue a cheque for making payments to its various creditors in some future agreed date.
5. Another main objective of preparing BRS is to control the internal management of the organization on cash inflow and outflow. BRS acts as a mechanism to keep a track on cash embezzlement, bank drafts and misuse of company’s funds by dishonest employees.
Impact of Bank Reconciliation Statements-
The following impact may occur if companies do not prepare bank reconciliation statements.
1. If the bank reconciliation statements are not prepared by the companies then there will be a difference in the bank column of cashbook and passbook. Hence, there will not be any accuracy in amounts of cashbook and passbook.
2. If the bank reconciliation statement is not prepared then the company will not have adequate information relating to the various banking transactions such as payment made to various creditors, bank interest, bank charges, dividends received etc.,
3. If the bank reconciliation statement is not prepared then it will be very difficult for an accountant to keep a track on available funds in the bank account as per passbook. This may result in the delay of future payment to suppliers, creditors and other agents.
4. If the bank reconciliation statement is not prepared by the companies then cash embezzlement, fraudulent transactions, misuse of company funds by the dishonest employees will increase and it cannot be easily traced by the company.
I would like to add an example for a clear understanding of the above explanation
Example for Bank Reconciliation Statement-
ABC Ltd furnishes you the following information prepare a Bank Reconciliation Statement to find out Debit Balance of Pass Book.
Bank Reconciliation Statement of ABC Ltd.
Impact of Transaction if bank reconciliation statement not prepared
If the cheque is deposited but not collected-
CashBook– The accountant will record the transaction and it will show an increase in the bank balance of cashbook (15,000+4,000 = 19,000).
PassBook– If the same is not recorded by the bank at the same time. Then the bank passbook will show the same balance (say- no increase and no decrease).
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