Bank Reconciliation Example

Introduction to Bank Reconciliation Examples

Bank Reconciliation is a process that gives the reasons for differences between the bank statement and Cash Book maintained by a business. Not only is the process used to find out the differences, but also to bring about changes in relevant accounting records to keep the records up to date. Bank reconciliations examples are carried out at regular intervals.

Examples of Bank Reconciliation (With Excel Template)

Let’s take an example to understand the calculation of Bank Reconciliation in a better manner.

Examples of Bank Reconciliation are as follows:

Bank Reconciliation Example – 1

Markson’s & Co. has a balance as per pass book of $1,000 as on 31^st March 2019. It has a balance as per Cash Book as on 31^st March 2019 of $1050. Further details are as follows:

1. A cheque of $300 was deposited, but not collected by the bank.
2. Bank charges of $50 were recorded in Passbook, but not in Cash Book.
3. Cheques worth $200 were issued, but not presented for payment.
4. Bank interest of $100 was recorded in Passbook, but not in Cash Book.

Solution: 

Bank Reconciliation Statement of Markson’s & Co. as on 31^st March 2019

Bank Reconciliation Example – 2

Wright Inc. has a balance in a Passbook of $10,000 as on 31^st December 2018. These are the other details:

1. Three cheques of $2,000, $1,500 and $2,500 were deposited in the bank on 30^th December 2018 but were recorded in the bank statement in January 2019.
2. Cheque of $500 issued on 31^st December 2018 was not presented for payment.
3. A dividend of $1,000 on stocks was credited in Bank Account, but not recorded in Cash Book.
4. A direct deposit of $400 was made in Bank Account by a customer, which was not recorded in Cash Book.
5. Bank charges of $100 were entered only in Bank Passbook
6. Balance as per Cash Book on 31^st December 2018 was $14,200.

Solution: 

Bank Reconciliation Statement of Wright Inc. as on 31^st December 2018

Bank Reconciliation Example – 3

Rutherford Inc. has a difference in the balance as per Cash Book and bank statement as on 31^st March 2019. You are advised to prepare a Bank Reconciliation statement as on that date with the following information:

1. Balance as per Bank Statement as on 31^st March 2019 is $4,000. Balance as per Cash Book is $1,400.
2. Cheque of $1,000 and $500 issued as on 30^th March 2019, but not yet cleared
3. An insurance premium paid by bank $200. It is not yet recorded in Cash Book.
4. An outgoing cheque of $2,000 recorded twice in the Cash Book. It is properly recorded in the bank statement.
5. Payment of a cheque of $400 recorded twice in PassBook.
6. Dividends received $500 recorded only in the bank statements and not Cash Book.
7. Cheque of $700 deposited on 29^th March 2019. But, it is not yet collected.
8. Bank charges of $100 debited only in Bank PassBook.

Solution: 

Bank Reconciliation Statement of Rutherford Inc. as on 31^st March 2019

Bank Reconciliation Example – 4

You are an Accountant in Jeffries Inc. You have prepared a Cash Book for March 2019. There is a difference in the balance as on 31^st March 2019 between the bank statement and Cash Book. You are required to prepare a Bank Reconciliation Statement as on 31^st March 2019. Below is the extract for Cash Book and Bank statement for the month of March 2019.

Cash Book (March 2019) for Jeffries Inc

Bank statement (March 2019) for Jeffries Inc

Solution:  

We first find the common items in the Cash Book and the Bank statement. The common items are:

The balance items would appear in the Bank Reconciliation Statement

Conclusion

Bank Reconciliation Statement is a valuable tool to identify differences between the balance as per Cash Book and bank statement. Bank reconciliation also helps in detecting some frauds and manipulations. It is a good practice to carry out this exercise at regular intervals, which helps in maintaining controls in the organization. This also keeps the Cash Book up to date as those transactions which are rightly recorded in the bank statement can be recorded in the Cash Book.

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