BANK RECONCILIATION STATEMENT

Views:
 
Category: Education
     
 

Presentation Description

Class 11 Accountancy

Comments

Presentation Transcript

BANK RECONCILIATION STATEMENT :

BANK RECONCILIATION STATEMENT

Cash book:

Cash book Business prépares Cash book It record both cash and bank transactions Deposits Withdrawals

Pass book:

Pass book Bank prepares Pass book It records bank transactions

Pass book:

Pass book Deposits Withdrawals

Problem faced by Business:

Problem faced by Business Business Bank balance Rs 35,000 Bank balance Rs 25,000

Problem faced by Business:

Problem faced by Business If the balance shown by the bank column of cash book is different from the balance shown by pass book, the business firm will identify the causes for such difference .

Bank Reconciliation Statement is a statement prepared to reconcile the difference between the balances :

Bank Reconciliation Statement is a statement prepared to reconcile the difference between the balances As per the bank column of the cash book As per the Pass book

PowerPoint Presentation:

Reason 1 Cheques issued by the firm but not yet presented for Payment Reasons for Differences Example: Cheques Rs.19,000 were issued 21 st July,2013 but they had no been presented for payment till 31 st July ,2013 Sometimes, receiving person may present these cheques to the bank for payment on some later date

PowerPoint Presentation:

Example: Cheques Rs.19,000 were issued 21 st July,2013 but they had no been presented for payment till 31 st July ,2013 Cash book balance Pass book balance Less More

PowerPoint Presentation:

Reason 2 Cheques deposited into bank but not yet collected Reasons for Differences Example: Cheques Rs.20,000 were deposited in to bank on 21 st July,2013 but they are not yet cleared or credited to our account. A few days are taken in clearing of local cheques and in case of outstation cheques few more days are taken

PowerPoint Presentation:

Cash book balance Pass book balance More Less Example: Cheques Rs.20,000 were deposited in to bank on 21 st July,2013 but they are not yet cleared or credited to our account.

PowerPoint Presentation:

Reason 3 Amount directly deposited by customer in the bank account Reasons for Differences Example: Rs.20,000 was directly deposited by customer in to bank on 21 st July,2013 but firm’s accountant came to know this on 31 st July,2013 Sometimes, the debtors or the customers deposit the money directly into firm’s bank account

PowerPoint Presentation:

Cash book balance Pass book balance Less More Example: Rs.20,000 was directly deposited by customer in to bank on 21 st July,2013 but firm’s accountant came to know this on 31 st July,2013

PowerPoint Presentation:

Reason 4 Bank Charges charged by bank Reasons for Differences Example: Rs.2000 was charged by bank as interest Bank charge in the form of fees or commission is charged from time to time for various services provided from the customers’ account without the intimation to the firm.

PowerPoint Presentation:

Cash book balance Pass book balance More Less Example: Rs.2000 was charged by bank as interest

PowerPoint Presentation:

Reason 5 Interest and dividend received by the bank Reasons for Differences Example: Bank credited Rs.6000 to customer’s account for dividend received Sometimes, the interest on debentures or dividends on shares held by the account holder is directly deposited by the company through Electronic Clearing System (ECS)

PowerPoint Presentation:

Cash book balance Pass book balance Less More Example: Bank credited Rs.6000 to customer’s account for dividend received

PowerPoint Presentation:

Reason 6 Direct payments made by the bank on behalf of the customers Reasons for Differences Example: Bank Paid Rs.6000 to Insurance company as per standing instructions of business. Sometimes, bank makes certain payments like Telephone bills, rent, insurance premium, taxes, etc on behalf of the customer as per standing instructions.

PowerPoint Presentation:

Cash book balance Pass book balance More Less Example: Bank Paid Rs.6000 to Insurance company as per standing instructions of business.

PowerPoint Presentation:

Reason 7 Errors committed in recording transactions by the firm Reasons for Differences

PowerPoint Presentation:

Reason 8 Errors committed in recording transactions by the Bank Reasons for Differences

PowerPoint Presentation:

Reason Cash book balance Pass book balance Rs.2,000 wrongly debited to the firm account by the bank Rs.2,000 wrongly debited to the firm account by the accountant An entry of Rs.2,000 was written twice in Debit side of bank column of cash book by the accountant A debit entry of Rs.2,000 was written on Credit side of bank column of cash book by the accountant by mistake More More More More Less Less Less Less

PowerPoint Presentation:

PROCEDURE FOR PREPARATION OF BANK RECONCILIATION STATEMENT You will start it with bank balance given in question. It can be cash book or pass book balance Make adjustments Add and subtract items You will reach other balance If starting point is cash book balance ,than ending point is pass book balance And vice versa

PowerPoint Presentation:

Things to Remember Cash book Dr Cr + _ Pass book Dr Cr _ + Positive Balance: Dr balance as per cash book Favourable balances as per cash book Cr balance as per pass book Favourable balances as per pass book Negative Balance: Cr balance as per cash book Unfavourable balances /Overdraft as per cash book Dr balance as per Pass book Unfavourable balances/Overdraft as per Pass book

PowerPoint Presentation:

Example: From the following particulars of M/s Ananaya Industries, prepare bank reconciliation statement as on December 31, 2012 1. Debit balance as per cash book Rs.32,500 2. Cheques deposited into bank but not credited up to December 31, 2012 Rs.8,900. 3. Cheques issued but not presented for payment Rs. 12,500. 4. Bank credited Rs.5,000 for receiving dividend 5. Bank charges debited by Bank Rs.400. If starting point is cash book balance ,than ending point is pass book balance

Method:

Method Our aim To make cash book balance equal to pass book So If transaction result in more pass book balance - Write under Plus Item If transaction result in less pass book balance - Write under Minus Item Example : Cheques deposited into bank but not credited up to December 31, 2012 Cash book balance Pass book balance More Less We will write it on minus side

Solution:

Solution Bank Reconciliation statement of M/s Ananaya Industries As on December 31, 2012 Transactions Plus amount Minus amount Debit balance as per cash book 32,500 1.Cheques deposited into bank but not credited up to December 31, 2012 8,900 2.Cheques issued but not presented for payment Rs. 12,500. 12,500 3.Bank credited Rs.5,000 for receiving dividend 5,000 4.Bank charges debited by Bank Rs.400 400 50,000 50,000 40,700 Balance as per pass book This is balancing figure

If we start with Pass book balance:

If we start with Pass book balance Our aim To make Pass book balance equal to Cash book So If transaction result in more Cash book balance - Write under Plus Item If transaction result in less Cash book balance - Write under Minus Item

Remember:

Remember Transactions Plus amount Minus amount Debit balance as per cash book ***** Debit balance as per pass book ***** Transactions Plus amount Minus amount Debit balance as per cash book ***** Credit balance as per pass book ***** If balancing figure comes on opposite side Write same balance otherwise opposite balance

Remember:

Remember Transactions Plus amount Minus amount Credit balance as per pass book ***** Debit balance as per Cash book ***** Transactions Plus amount Minus amount Credit balance as per Pass book ***** Debit balance as per cash book *****

PowerPoint Presentation:

click here Now take this Quiz

authorStream Live Help