BANK RECONCILLIATION

Bank Reconciliation  Credit Memos (+)

- Difference between the book (company)
balance of cash and the cash balance
reported in the bank statement
- as notes collected by the bank in
Bank Statement
- Monthly report provided by the bank to
the depositor which shows:
a. Beginning-of-month cash balance
b. Total deposits made by depositor
and other bank credits
c. Checks paid by the bank and other
bank charges
d. End-of-month cash balance
Bank Reconciling Items
- If bank is the last to know
- Doesn’t have adjusting entry
- Credit if overstated
- Debit if understated
 Deposit in Transit/Undeposited Check
(+)
- Made at month-end which is
recorded as receipt by depositor but
is more likely not acknowledged by
bank (DIT)
- Collections still in the hands of the
depositor awaiting delivery to the
bank for deposit (UC)
- Comparing receipts in the
accounting records and deposits in
the bank statements
- Understated (Bank)
- Added to Bank balance
 Outstanding Checks (-)
- Issued but not encashed by
receipient
- Comparing written checks during the
month as reflected in the company’s
check voucher or cash disbursement
book
- Overstated (Bank)
- Deducted from bank balance
 Errors
- Dinagdag sa iyo ng bangko
- Deposits or credits made directly by
the bank to depositor’s account such
favor of the depositor, proceeds of
bank loan and interest earned on the
depositor’s account
- Understate book balance
- Added to cash balance per bank
 Debit Memos (-)
- Binawas sa iyo ng bangko
- Charges to the company’s or
depositor’s account made directly by
the bank such as returned checks,
bank service charge and charge for
the cost of check booklets and
payment of loan
- Overstate book balance
- Deducted from the cash balance per
book
 Errors
Forms of Bank Reconciliation
 Adjusted Balance Method
- Equal amount for book and bank
- Both sides of book and bank
- statements are seen
Book Balance xx
Add: Missing Receipts xx
Interest Received xx
Total xx
Less: Bank Fees
Bounced Checks xx
Adjusted book balance xx
Bank Balance xx
Add: Deposits in transit xx
Total xx
Less: Outstanding Checks xx
Adjusted bank balance xx

Book Reconciling Items

- If book is last to know
- Has adjusting entry
 BANK RECONCILLIATION

 Book to Bank Method

- Started with book balance and ends
with bank balance

Book Balance xx
Add: Credit Memos xx
Outstanding Checks xx xx
Total xx
Less: Debit Memos xx
Deposit in transit xx xx
Bank Balance xx

 Bank to Book Method

- Started with bank balance and ends
with book balance

Bank Balance xx
Add: Debit Memos xx
Deposit in transit xx xx
Total xx
Less: Credit Memos xx
Outstanding Checks xx xx
Bank Balance xx