Explanation ‘The bvo accounts have equal or the same balances because they tare reciprocal accounts, ‘This means that when one aocount is debited, the other account. is credited or view versa ‘The reason for this is that the two accounts cover or rflecé the samo itoms or transactions. ‘Thus, if no errors are committed in recording, and the same information hn been recorded by bath aecounts, the twa should hhave equal or the same balances, But vory frequently, there are items on the depositor’ book. ‘which do not appear on the bank rocords as ofthe ame date. For example, checks issued by the depositor are not yet presented for payment to the bank or deposits may have been ‘made after the bank records ate sent out to the depositor. ‘And less frequently, thore are itoms on the bank records which o not appear on the depositer’s book. For example a, The bank may have charged the depositor’s account with servioo charges which the depositor may not know about Uuntil a report is received from the bank, b, Notes endorsed to the bank for collection have heen collected by the bank and credited to the depositor's accoxnt Dut notice of collection isnot yet received from the bank by the depositor. Tn.the light of the foregoing, it becomes necessary to prepare a bank reeoneiliation, 228 Bank reconciliation A bank reconciliation is statement which brings into ‘agreement the cash balance per book and cash balance per bank, ‘he reconciliation is usually prepared monthly because the bank provides the depositor with the bank statement at the end of fevory month. ‘A bonkestatementis.a monthly roport of the bank tothe depositor showing: 4, Tho cush balunee per bank at the beginning , ‘The deposits made by the depositor and asknowledged hy the bank 6 The cheeks drawn by the depositor and paid by the bank 4. The daily cash balance per bank during the month ‘Actually, the bank statement is an exact copy ofthe depositor's Tedgor in the records of the bank. When the bank statement is received, attached thereto are the depositors canesled checks and any debit or eredit memoranda that have affocted the depositor's account. ‘The eanceled checks are the checks issued by the depositor and paid by the bank during the month. ‘Theso are called canceled checks heeause they are literally canecled by stamping or punching to show that they have been paid. a9.