Professional Documents
Culture Documents
Bank Reconciliation
Bank Reconciliation
RECONCILIATION
Bank • Demand Deposit – is the
Deposits current account or checking
account or commercial
deposit where deposits are
There are covered by deposit slips and
three kinds of where funds are withdrawable
bank on demand by drawing checks
deposits, against the bank.
namely:
Saving Deposit – the depositor is given a passbook upon the
initial deposit. The passbook is required when making
deposits and withdrawals.
Cash ₱ 100,000
Company X ₱ 100,000
When the bank credits the account of the depositor,
company x, recognizes its liability to the depositor.
Company X ₱ 30,000
Cash ₱ 30,000
A bank reconciliation is a statement which brings into
agreement the cash balance per book and cash balance per
bank.
At the end of every month, comparison between the cash records of the
depositor and the bank statement received from the bank will yield the
following items:
1. Book reconciling items:
a. Credit Memos
b. Debit Memos
c. Errors
2. Bank reconciling items:
a. Deposits in transit
b. Outstanding checks
c. Errors
Credit • Refers to the items not
Memos representing deposits credited
by the bank to the account of
the depositor but not yet
recorded by the depositor as
cash receipt. They have the
effect of increasing the bank
balance.
Typical a. Notes receivable collected by
the bank in favor of the
example of depositor and credited to the
bank account of the depositor.
b. Proceeds of bank loan credited
Memos to the account of the depositor
c. Matured time deposits
transferred by the bank to the
current account of the
depositor.
Debit • Refer to the items not
representing checks paid by
Memos bank which are charged or
debited by the bank to the
account of the depositor but
not yet recorded by the
depositor as cash
disbursements.
• They have the effect of
decreasing the bank balance.
Typical a. NSF or no sufficient funds
checks – these are checks
examples of deposited but not returned
debit memos by the bank because of
are: insufficiency of fund. The
other name for NFS is DAIF
or “drawn against
insufficient fund”.
Typical b. Technically defective checks –
these are checks deposited but
examples of returned by the bank because
debit memos technical defects such as absence
of signature or countersignature,
are: erasures are not countersigned,
mutilated checks, conflict
between amount in words and
amount in figures.
Typical c. Bank Service Charges – these
include bank charges for
examples of interests, collection, checkbook
debit memos and penalty.
d. Reduction of Loan – this
are: pertains to amount deducted
from the current account of the
depositor in payment for the
loan which the depositor owes
to the bank and which has
already matured.
• Are collections already recorded by
Deposit in the depositor as cash receipts but
transit not yet reflected on the bank
statement.
Deposit in a. Collection already forwarded to
transit the bank for deposit but too late
to appear in the bank statement.
includes: b. Undeposited collection or those
still in the hands of the depositor.
In effect, these are cash on hand
awaiting delivery to the bank for
deposit.
• Are checks already recorded by
Outstanding the depositor as cash
checks disbursement but not yet
reflected on the bank statement.
Outstanding a. Checks drawn and already
checks given to the payees but not
yet presented for payment.
include: b. Certified checks – is one
where the bank has stamped
on its face the word
“accepted” or “certified”
indicating sufficiency of
fund.
FORMS OF
BANK
RECONCILIATIO
N
There are 1. Unadjusted Bank to Book
three methods Balance Method
of preparing
This method simply adjusts the
unadjusted balance per bank in
the bank order to arrive at the unadjusted
reconciliation trial balance per book.
2. Unadjusted Book to Bank
Balance Method
This method simply adjust
the unadjusted balance per
book in order to arrive at the
unadjusted balance per bank.
3. Adjusted Balance Method
This method adjusts both
balances (balance per bank and
balance per book) to the corrected
cash balance that will be presented in
the balance sheet.
For the purpose of our
discussion, the adjusted balance
method will be used in reconciling the
difference of the balance per bank and
the balance per book.
THE CHECK
Check • Is an instrument issued by a person in
payment of goods and services acquired.
• This is a written order directing the person’s
bank to pay a certain amount of money to be
drawn against the person’s checking account
upon the bank certification that the person’s
signature on the check is authentic and that
the person has sufficient funds in his/her
checking account to cover the amount.
Types of • A check wherein the issue date or
Checks the date of the check is past six
months or one hundred eighty one
days or more is considered to be a
stale check.
• A check dated at a future date is
considered a post dated check.
COMPUTATION
FOR DEPOSIT
IN TRANSIT
Deposits in Transit, beginning of the month ₱ xxx
Note: The Balance per books of ₱ 324,000 is the cash in bank balance per general ledger.
General Ledger