Bank Reconciliation

Question 1

What is the purpose of a bank rec statement?

Answer 1

To explain any differences btw the bank balance at the end of the period as shown in the bank statement and in the firm’s ledger, respectively. Any errors may be rectified before completing the journals and postings for the period.

Question 2

steps in preparing a bank rec

Answer 2

1. start with balance per bank and balance per books
2. add to/subtract from bank balance those items that appear on the books but not on the bank statement
   - —-> add deposits in transit to bank balance
   - –> subtract outstanding cheques from the bank balance
3. Then calculate adjusted bank balance
4. Then journalise those items that appear on bank statement but not on the firm’s books
   - —> Dr cash at bank for bank collections, EFT cash receipts, interest revenue etc,
   - —-> Cr Cash at bank EFT cash payments, service charges, cost of printed cheques, other bank charges

Question 3

What would be dr to cash at bank for a bank rec (per books)?

Answer 3

Dr cash at bank for bank collections, EFT cash receipts, interest revenue

Question 4

What is credited to cash at bank (per books)

Answer 4

Cr Cash at bank EFT cash payments, service charges, cost of printed cheques, other bank charges (dishonoured cheque fees)