Cash Book Bank Column Bank statement

31 Jan Bank balance same

1. Transaction missed from Cash Book but recorded bank statement

2. Transaction missed from Bank statement but present in Cash Book

Transaction missed from Cash Book but recorded in bank statement

i. Direct Debit
WAPDA electricity
Authorize WAPDA (third-party) deduct on a monthly from my bank account

Amount unknown

 Date unknown
ii. Standing Order

Gym membership fee

Authorize your Bank to pay a fixed monthly payment to a third party (Gym)

 Amount known
 Date unknown

iii. Dishonored Cheques

A customer paid us by cheque. We deposited that cheque into our bank account. You came
back and recorded it in your cashbook. If the cheque is rejected by the issuer’s bank then it is
called dishonored cheque.
iv. Bank Charges
Bank charges are deducted on a yearly basis, but sometimes the bank account holder is not
notified of the deduction.
v. Credit transfers (in your bank account)
These include dividends, bank interest and any other receipts in your bank account.
vi. Bank errors
Transactions missed from Bank statement but present in Cash Book
i. Cheques not yet presented (Unpresented cheques)
You made a payment by cheque to someone. You record that payment as a credit in your
cash book. That person/business failed to present that cheque into their bank account.

ii. Amount not yet credited (Uncredited cheques/deposits)

1. Someone paid you by cheque and you deposited it in your bank ac on 31 Jan. (1 Feb)
2. Sometimes amounts deposited in bank account are not reflected in the bank
statement on the same day because of any technical issues.

Step 1. Prepare an updated/adjusted cash book

Debit the amounts which are the on the receiving side (credit side) of the bank
statement
Credit the amount which are on the payment side (debit side) of the Bank
statement
Step 2. Prepare a Bank Reconciliation Statement
 Start the statement with Bank Statement Balance (Balance as per bank
statement) – positive/credit balance
 Add amounts which are paid into bank account but not shown in bank
statement (Uncredited cheques)
 Less amounts which are supposed to be deducted from your bank
account but not shown in the bank statement (Unpresented amounts)
 Balance as per updated cash book
 *Make any adjustments for bank errors by adding amounts debited in
error by the bank and deducting amounts credited in error by the
bank.
It is discovered that Fatima has made an error on 10 April and recorded
purchases as $234, when the correct figure was $243.
 Updated Cash Book
$ $
May 1 Bal b/d 2834 Bank Charges 95
Dividends 150 Purchases (error) 9
Bal c/d 2880
2984
2984

Bank Reconciliation statement at 30 April 20–8

$ $

Balance as per bank statement 3092

Add: ABC Stores 217
Sales 1460 1677

4769
Less: Tee Dee Co 1372
Dobhal Ltd 517
(1889)
Balance as per updated cash book 2880
On 31 July 20–8 the bank account in Fatima’s cash book showed an overdrawn
balance of $1 121. On the same date her bank statement showed a debit balance
of $1 091.
When comparing the cash book and the bank statement it was found that the
following items appeared only in the cash book:
1 A cheque paid to PJ Motors for $163 on 29 July.
2 Cash sales amounting to $1 010 paid into the bank on 31 July.
The following items appeared only on the bank statement and not in the cash
book:
1 Rent received paid directly into the bank $190.
2 Bank charges of $213.
3 A credit balance on 1 July was shown as $2 100 instead of $1 200.

a) Make any additional entries that are required in Fatima’s cash book.
Balance the bank account and bring down the balance on 1 May 20–8.
b) Prepare a bank reconciliation statement at 31 July 20–8.

$ $

Rent recievebale 190 31 July b/d 1121

Bank Charges 213

c/d 1144
1334 1334
 $ $
Balance as per bank statement 1091 (Dr)
Add: Bank Error 900
: Cash sales 1010 1910
3001

Less: PJ Motors