Bank Reconciliation Statement

Laneco Inc. has a difference in the balance as per Cash Book and bank
statement as on 31st 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 31st March 2019 is ₱4,000.

Balance as per Cash Book is ₱1,400.
2. Cheque of ₱1,000 and ₱500 issued as on 30th 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 29th March 2019. But, it is not yet
collected.
8. Bank charges of ₱100 debited only in Bank PassBook.

Solution: 

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

Particulars Amount Amount

(in ₱) (in ₱)
Balance as per Passbook 4,000
Add: Insurance premium paid by bank 200
Cheque recorded twice in Passbook 400
Cheque deposited but not yet collected 700
Bank charges debited only in passbook 100 1,400
Less: Cheques issued but not presented for 1500
payment (₱1,000+₱500)
Cheque recorded twice in Cash Book 2000
Dividends received recorded only in bank 500 4000
statement
Balance as per Cash Book 1400
 The Use of Bank Reconciliation
 Due to the timing difference, omissions
and errors made by the bank or the
firm itself, the balances of the bank
statement and the bank account in the
cash book rarely agree.
 Bank reconciliation statements can be
used to explain the reasons for the
differences and to identify errors and
omissions in both documents, so that
corrections can be made as soon as
possible.
 The objective of Bank Reconciliation is
to ensure that all entries in the Cash
Receipts Journal and the Cash
Payments Journal appear on the Bank
Statement
 And to ensure that all entries of the
Bank Statement appear in the
business's Cash journals.
 The Bank Reconciliation Statement
shows the entries which the Bank still
has to process, while we will add any
missing entries from the Bank
Statement in our Cash Receipt Journal
and Cash Payment Journal.
The importance of Bank Reconciliations
 Preparation of bank reconciliation helps
in the identification of errors in the
accounting records of the company or
the bank.
 Bank reconciliations provide the
necessary control mechanism to help
protect the valuable resource through
uncovering irregularities such as
unauthorized bank withdrawals.
 If the bank balance appearing in the
accounting records can be confirmed to
be comfort that the bank transactions
have been recorded correctly in the
company correct by comparing it with
the bank statement balance, it provides
added records.
 Monthly preparation of bank
reconciliation assists in the regular
monitoring of cash flows of a business.
 It provides confirmation to client as to
why they did not receive cheques.
 It helps you a trend of frauds and
catches it on time.
 It gives an idea of the direction you are
heading towards.
 Knowing your pure cash position and
how much is receivables