BANK RECONCILIATION

• A bank reconciliation statement is a report that is prepared for the purpose of bringing the balances of cash (a) per records and (b) per bank statement into agreement.
• Balance per books, end- the cash balance

  in the accounting records as of the end of

  the current month.
• Balance per bank statement, end- the

  ending cash balance in the bank statement

  of the current month.
• Credit memos- These are additions (bank credits) made by the bank to the depositor’s bank account but not yet recorded by the depositor.
• Examples of Credit Memo:

  a. Collections made by the bank on behalf of the depositor

  b. Interest income earned by the deposit.
• Debit memos- These are deductions (bank debits) made by the bank to the depositor’s bank account but not yet recorded by the depositor.
• Examples of Debit memos:

  a. Bank service charges

  b. NSF checks
• Deposits in transit- are deposits already made but not yet received by the bank, or received by the bank but not yet credited to the depositor’s bank account.
• Outstanding checks- These are checks drawn and released to payees but are not yet encashed with the bank.
• Outstanding checks exclude the following:

  • Certified checks
  • Stale checks
  • Book errors
  • Bank errors
• Outstanding checks exclude the following:

  • Certified checks
  • Stale checks
  • Book errors
  • Bank errors
• Book errors- errors committed by the depositor.
• Bank errors- errors committed by the bank.
• Label the ff.

  A) Nature of Bank Reconciliation Statement

  B) Bank Reconciliation Statement

  C) accounting records

  D) bank statement

  E) time lags

  F) Errors