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BANK RECONCILIATION STATEMENT

When the money is deposited by us into bank, we debit the cash book in the bank column, on the other hand, on receipt of money from the customer, the bank gives credit to the another customer a/c when money is with draw from the bank firm gives credit to the cash in the bank column which bank debit the account of the customer.
DEFINITION:
BANK RECONCILIATION STATEMENT – Refer to the periodical statement prepared by a trader for purpose of identify and adjusting cash balance and the bank statement.
BANK STATEMENT – Is the statement prepared by bank and sent to the customer showing transactions between the bank and customer for his information and verification.
OBJECTIVE OF BANK RECONCILIATION STATEMENT
The main objective of preparing this statement is to know what causes of difference between cash balance and bank statement.
1. CAUSES OF THE DIFFERENCE BETWEEN CASH AND BANK STATEMENT
UNPRESENTED CHEQUE; is the cheque issued by a business but not yet presented to the bank for payment.
2. UNCREDITED CHEQUE; which has been deposited sent to our bank but not yet collect, not credited to customer’s book.
3. BANK CHARGE; The bank charge their customer for the services it render to the customer for time to time by deducting the customer a/c as soon as it render such services however a customer will know such charge only when he receives a statement account from the bank.
4. STANDING ORDER; any payment made by the bank on behalf of the business, not recorded in the cash book.
5. DIRECTED COLLECTION ON BEHALF OF THE CUSTOMER; a bank may received amount due to the customer directly from customer debtors for e.g. The bank may get dividend ,rent, interest and credit.
6. ERROR; They may be error in the account maintained by the customer as well as bank E.g. wrong debit or credit may be given a bank or customers.
TECHNIQUE OF PREPARING BANK RECONCILIATION STATEMENT
The following are the steps to be taken for preparing the bank reconciliation statement;
1. The cash book should be completed and balance as per the cash book column particular date should be found.
2. The bank should be requested to complete and sent to the business bank statement.
3. The balance as shown either by cash book or bank statement should be taken as a base.
4. The effect in a particular cause if difference should be studied on the balance shown by the either book.
HOW TO RECONCILE
1.-Compare the item which appears in the debit side of the each {bank column} with those items appearing on the credit column of the bank statement by breaking {making] item appearing in both places.
2.-Comparing also the items which appear on the credits side of the cash book { bank column} which those item appearing in the debit column of the bank statement by taking items appearing in the both places.
3.-Preparing bank reconciliation statement in case has resulted in an increase it can be deducted and vice versa.
STRUCTURE OF BANK RECONCILIATION STATEMENT
Balance as per cash book
xxxxxx
Add: Unpresented cheque
xxxxxx
xxxxxx
Less: Uncredited cheque
xxxxx
BALANCE AS PER BANK STATEMENT
xxxxx
Balance as per bank statement
xxxxxx
Add: uncredited cheque
xxxxxx
xxxxxx
Less: unpresented cheque
xxxxxx

BALANCE AS PER CASH BOOK
xxxxxx
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT
Example 1
From the following information prepare bank reconciliation statement as at 31st July 2008
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT

BANK RECONCILIATION STATEMENT AS AT 31/7/2008
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT
Example
.2
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT
BANK STATEMENT
DATE
DETAILS
DR
CR
BALANCE
1/6
balance b/d
14100
7/6

cheque{ aisha}
620
14720
8/6
salma
1800
12920
16/6
cheque
750
13620

17/6
issa
5190
8480
18/6
mussa
4100
8070
28/6
cheque
2240
10370
29/6
standing order
520
9790
30/6
credit transfer
640
10430
30/6
bank charges
430
10000
Solution;
BANK RECONCILIATION STATEMENT AS AT 30th JUNE
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT
Example.3
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT
BANK STATEMENT
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT
REQUIRED; A] ADJUSTED CASH BOOK
B] BANK RECONCILIATION STATEMENT
Solution
DR ADJUSTED CASH BOOK CR
Balance b/d 48500
Credit transfer 6000
54500
Balance b/d 46500
Bank charge 8000
Balance c/d 46500
54500
BANK RECONCILIATION STATEMENT AS AT 31 DEC 2009
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT
EXERCISE.1
DR CASH BOOK CR
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT

BANK STATEMENT
DATE
1/6
5/6
14/6
16/6
29/6
30/6
DETAILS
Balance b/d
cheque
cheque
credit transfer
bank charge
standing order
DR
5000
3000
500
CR
5000
3000
BALANCES
10000
15000
10000
13000
10000
9500
REQUIRED: a] Draw up adjusted cash book
b] Prepare bank reconciliation statement {start with the balance as per bank statement}.
Solution;-
DR ADJUSTED CASH BOOK CR
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT
BANK RECONCILIATION STATEMENT
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT
AN OVERDRAFT
Is a form of loan to a customer by a bank where by a customer his allow to with draw more money than that he/she has in his or her account, O/D Represents over draft.
BANK RECONCILIATION AS AT……………………….
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT

BANK RECONCILIATION STATEMENT AS AT……………
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT


Example.4
BANK STATEMENT

DATE
1/4
2/4
15/4
16/4
20/4
21/4
29/4
30/4

DETAILS
BALANCE B/D
CHEQUE
FADHILA
LEYLA
KASSIM
STANDING ORDER
BANK CHARGES
CREDIT TRANSFER
DR
400
770
400
CR
3080
1200
1240
1000
BALANCE
7090 O/D
4010 O/D
5410 O/D
4210 O/D
2970 O/D
3740 O/D
4140 O/D
3440 O/D

Solution
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT

EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT
EXERCISE;
You are given the following information of Hudhaifa & son’s LTD on march 1996
BANK STATEMENTS
DATE

1/3

DETAILS



Balance b/d
DR
CR
BALANCES
51970 O/D
8/3
Lima
1220
53190 O/D
16/3
a.bakar
2440
50750 O/D
20/3
a.bakhani
2080
5283 O/D
21/3
s.salum
3330
49500 O/D
31/3
traders credit
570
48930 O/D
31/3
Standing order
490
49420 O/D
31/3
Bank charges
280
49700 O/D
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT
Draw up a] cash book up to date
b] Bank reconciliation statement as on 31st December 1996
EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT




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EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT

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1 Comment

  • EcoleBooks | BOOK KEEPING O LEVEL(FORM TWO) NOTES - BANK RECONCILIATION STATEMENT

    Belinda Mosha, May 31, 2024 @ 2:23 pm Reply

    Please give me healp

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