BANK RECONCILIATION

- A monthly statement to reconcile the difference between business’s bank account balances with the bank statement.
- Every month, business will receive monthly bank statement from bank
- Business would expect the ending balance in the cash book to be the same as the actual ending balance in the bank
statement.
- This is what bank reconciliation is for: to do whatever adjustments to business record and come up with the same ending
balance as recorded by the bank

COLUMN IN CASH BOOK VS COLUMN IN BANK STATEMENT

YOUAITIEM BANK
Bank Statement
Date Particulars Debit(RM) Credit (RM) Balance (RM)
Payments Receipts

Bank Account
Debit column Credit column
Receipts Payments

Why are there differences between bank statement and bank account balance?
A.- There are items that have been recorded in bank account but not yet recorded by the bank
- Examples:
i. Uncredited lodgement(deposits)
This happens when business deposits money/cheque and have recorded it under receipt in bank account but not yet
processed by bank

ii. Unpresented cheques

This happens when cheques are issued for payment and have recorded it under payment in bank account but they
have not been cleared by bank

B. There are items that have been recorded in the bank statement but not yet recorded in bank account
-Examples:
i. Direct debit/Standing instruction
ii. Bank charge
iii. Interest revenue
iv. Bank GIRO credit/Credit transfer

C. Errors
- Examples:
i. Errors made by the bank
i.e. Cheque received from receivable was debited in the bank statement
ii. Errors made by the business
i.e. Error in recording the amount/ Error in recording the amount to be debited /credited
STEPS IN PREPARING BANK RECONCILIATION STATEMENT

Sample of Bank Statement and Bank Account:

YOUAITIEM BANK
Bank Statement
Ami Enterprise 31 March 2019
Jalan Mahkota, Melaka Page 1 of 1
Date Particulars Debit(RM) Credit (RM) Balance (RM)
2019
March 1 Balance b/d 200.20 Cr
March 3 Cash deposit 6,000.00√ 6,200.20 Cr
March 4 Electronic Fund Transfer 1,500.00√ 7,700.20 Cr
March 6 Cheque book 5.00√ 7,695.20 Cr
March 8 Clearing cheque-89090 450.00√ 7,245.20 Cr
March 10 Clearing cheque-89091 600.00√ 6,645.20 Cr
March 12 Clearing cheque-89092 343.00√ 6,302.20 Cr
March 15 Bank GIRO credit 542.00 6,844.20 Cr
March 20 Direct Debit 465.00 6,379.20 Cr
March 25 Interest 245.80 6,625.00 Cr
March 28 Bank charges 10.00 6,615.00 Cr

Bank Account
Date Particulars RM Date Particulars RM
March 1 Balance b/d 200.20 √ March Cheque book 5.00 √
7
3 Cash deposit 6,000.00 √ 7 Lim Auto -89090 450.00 √
4 Electronic Fund Transfer 1,500.00 √ 8 Calmex Bhd-89091 600.00 √
30 Ros Brothers 100.00 10 Ali-89092 343.00 √
28 Ben-89094 300.00
31 Balance c/d 6,102.20
7,800.20 7,800.20

STEP1. Updating the bank account

i. Tick items that appear both in bank statement and bank account
ii. Items appearing in bank statement but did not appear in bank account are transferred to bank account (Debit in
bank statement credited in bank account and vice versa)
iii. Unticked items in the bank account are treated as uncredited lodgements (if debit items) or unpresented cheques
(if credit items)

Updated Bank Account

RM RM
Balance b/d 6,102.20 Direct debit 465
Bank GIRO credit 542.00 Bank charges 10
Interest 245.80 Balance c/d 6,415.00
6,890.00 6,890.00

STEP 2. Prepare the Bank Reconciliation Statement

Bank Reconciliation Statement as at 31 March 2019

RM
Balance as per bank account (updated figure) 6,415.00
Add:
Unpresented cheques: Ben 89094 300.00
Less:
Uncredited lodgement: Ros Brothers (100.00)
Balance as per bank statement 6,615.00
TUTORIAL [BANK RECONCILIATION]

QUESTION 1

Bank Account
Date Particulars RM Date Particulars RM
July 1 Balance b/d 2,062 2 Creditors 500
5 Halim Enterprise 200 10 Creditors 2,640
12 Gumbira Sdn Bhd 2,442 12 Purchase 400
18 Amin Trading 2,242 15 Purchase 5,000
25 Gumbira Sdn Bhd 2,400 20 Bills 1,000
30 Sales 890 30 Kalsom Selamat 5,000
30 Balance c/d 4,304
14,540 14,540

Rakyat Melaka Bank

Bank Statement
Ami Enterprise 31 July 2019
Jalan Mahkota, Melaka Page 1 of 1
Date Particulars Debit(RM) Credit (RM) Balance (RM)
2019
July 1 Balance b/d 2,062 Cr
10 Cheque Deposit 200 2,262 Cr
12 Cheque Deposit 2,442 4,704 Cr
13 Cheque 00423 500 4,204 Cr
15 Cheque 00425 400 3,804 Cr
15 Cheque Deposit 2,000 5,804 Cr
17 Cheque 00426 5,000 804 Cr
20 Credit transfer 300 1,104 Cr
21 Dividend 200 1,304 Cr
21 Cheque Deposit 2,242 3,546 Cr
22 Cheque 00427 1,000 2,546 Cr
24 Cheque returned 400 2,146 Cr
30 Standing Order 420 1,726 Cr
30 Bank Charges 70 1,658 Cr
31 Direct Debits 200 1,456 Cr

Prepare the following:

(a) Adjusted cash book

(b) Bank reconciliation statement as at 31 July 2019
QUESTION 2

Rakyat Melaka Bank

Bank Statement
Ami Enterprise 31 July 2019
Jalan Mahkota, Melaka Page 1 of 1
Date Particulars Debit(RM) Credit (RM) Balance (RM)
2019
December 1 Balance b/d 2,912 Cr
5 Cheque cleared-001234 393 2,519 Cr
5 Dividend 76 2,595 Cr
5 Cheque cleared-432153 562 3,157 Cr
11 Credit transfer 235 3,392 Cr
14 Standing order 182 3,210 Cr
20 Cheque cleared -001235 357 2,853 Cr
20 Cheque deposited 168 3,021 Cr
21 Cheque cleared – 001237 211 2,810 Cr
23 Bank charges 68 2,742 Cr
25 Cheque deposited 135 2,877 Cr
28 Direct debit 138 2,739 Cr
28 Cheque cleared-001241 170 2,560 Cr
29 Dishonoured cheque 162 2,407 Cr
31 Credit transfer 122 2,529 Cr
31 Balance c/d 2,529 Cr

Bank Account
Date Particulars RM Date Particulars RM
Dec 1 Balance b/d 2,912 Dec 1 Utilities 001234 393
4 Yusni 432153 562 2 Nurul 001235 357
18 Syazwan 681271 168 12 Jaizah 001236 321
29 Anwar 738231 348 18 Rental 001237 211
30 Liza 555666 784 20 Ibrahim 001238 195
20 Fikri 001242 135
21 Linda 001240 157
23 Katty 001241 120
31 Balance c/d 2,885

4,774 4,774

Additional information:

1. The business recorded a cheque paid to Katty RM120 instead of RM170.

2. The business has wrongly recorded a receipt from Fikri amounted to RM135 as payment transaction.

You are required to prepare the following:

i. The updated Bank Acocunt

ii. The Bank Reconciliation Statement as at 31 December 2019