Bank Reconciliation

Statement

AGNES L. CAJUCOM
 1.Describe and identify the common
reconciling items of a bank
reconciliation statement and its
nature

2. Describe the nature of a bank

reconciliation statement;

LEARNING 3. Identify common reconciling

OBJECTIVES items and describe each of them.
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Describe and identify the common reconciling items
of a bank reconciliation statement and its nature

The word “reconcile,” which, according to

Merriam-webster dictionary, means “to cause
people or groups to become friendly again after an
argument or disagreement.” This concept is related
to the bank reconciliation statement, which
resolves two different account balances: the book
of the business and its bank account balance.
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Answer the following questions.

1. What is a bank statement?

2. Why does the depositor need
a bank statement?
3. Once a bank statement is
received, what will the
company do?
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Read the situation carefully, then reread it
again until you understand and find the right
answer. Write your answer on a separate
sheet of paper.

Read the following transactions and

identify the cause based on time
differences or errors
made by the business firm/bank. 20XX 5
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 Nature of Bank Reconciliation
Statement

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A bank reconciliation statement is a monthly

report that is prepared to reconcile two
reciprocal accounts: the cash balance per book
records and the cash per bank balance

to show that there is no discrepancy.

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These reciprocal accounts should have the same

balance after an adjustment has been made. In

preparing a bank reconciliation, we compare

the cash balance of the business records corresponds to

the amount of the bank

The statement, which determines the differences

between the two to correct the accounting

records, check fraudulent transactions and resolve

discrepancies.
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When a bank the statement was

received, it should be reviewed
and compared with the business
accounting records. A business
that has two or more bank
accounts will have separate bank
reconciliations statements.

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The common causes of discrepancy are as follows .

Timing differences - prevent either the company or the
bank from recording the transaction in the same period.
For example, in a bank statement that ends on March
31, 2019, the company collected the cash of P50,000 at
5:00 in the afternoon. Bank usually
Closes at 4:00 in the afternoon. In this scenario, it was
recorded in the company’s book.
The cash was collected but not reflected in the bank as a
deposit.
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Errors- erroneously record the transaction

either of the company or the bank. For
example, a check was issued by the company to
PLDT, amounting to P5,000.
Erroneously the company recorded this as P500.
The check amounting to P5,000 was
cleared at the bank. In this scenario, there is an
error between the company's records
and the bank’s records.
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These three methods of preparing a bank

reconciliation statement of business are as
follows:
a. The adjusted method is a method that
adjusts both balances per bank and balances
per book to determine the correct cash
balance separately.
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b. Book Bank Method is a method that

adjusts the book balance to agree with the
bank balance.
c. Bank to Book Method is a method that
adjusts the bank balance to agree with the
book balance.

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 Team

Name Name Name Name

Title Title Title Title

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 Content

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Debit Memo - are deductions made by
the bank to the account of the
depositor.
Examples are bank charges for
returned checks due to no
sufficient funds (NSF Checks),
automatic debits, or payment of
bills made by the bank on behalf of
the depositor and
bank service charges such as for
printing, checkbooks, and mailing
the bank statement.

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Bank service charges - are fees such as check printing
and processing that the bank
deducts from the depositor.
NSF (no sufficient fund) check - is a check that was
dishonored and returned by the
bank to the person or company writing the check
because that account did not have
enough funds.
Book Errors - are items erroneously recorded by the
company. For example, the
company deposit P20,000 but recorded it P2,000.
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 Reconciling Items per Bank
Deposit in Transit- amounts received and recorded by the company but not yet
deposited or the amount deposited after the bank's cut-off time. It often happens
where deposits were mailed to the bank or checks were cleared after the cut-off.
For example,
on January 30, 2019, at 2:00 PM, HUGOT Company received a P4,000 check
from a customer is recorded at the book. The company deposited the check at
3:30 PM and
were informed that their cut-off time is 11:30 AM. In this scenario, the check was
credited to HUGOT Company on February 1, 2019.

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Outstanding Checks - checks issued by the company to payees but
not yet encashed with the bank or cleared by the bank. For
example, on April 27, 2019, AKO Company issued and recorded a
P1,000 check in favor of IKAW Company. April 28, 2019, IKAW
Company picked -up the check, which was deposited on May 1,
2019, and cleared by the bank on May 2, 2019. In this scenario,
the check deducted from the book cash balance in
April; however, a deduction in the bank was made in May.
Therefore, comparing the
balance of the company's book and bank records shows that
bank records have a higher balance than the company's book.
Which of the two records is correct? The company’s accounting
record is correct that aims to determine the amount of cash it
can use, and it was already promised to the payee the amount of
P1,000 on April 28, 2019.
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 . Inthis scenario, the check deducted from the book cash balance in
April; however, a deduction in the bank was made in May. Therefore,
comparing the
balance of the company's book and bank records shows that bank
records have a higher balance than the company's book. Which of the
two records is correct? The company’s accounting record is correct
that aims to determine the amount of cash it can use, and it was
already promised to the payee the amount of P1,000 on April 28, 2019.

Bank Errors - are items erroneously recorded by

the bank. For example, a check deposit
of P10,000 was recorded P1,000.
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 Answer the question to test your understanding. Write your answer on a separate
sheet of paper.
1. What is bank reconciliation?
_______________________________________________________________________
_______
_______________________________________________________________________
_______
2. What are the three methods of bank reconciliation?
_______________________________________________________________________
_______
_______________________________________________________________________
_______
3. What is the book reconciling items? Explain by giving an example on one of the
items.
_________________________________________

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 4. What are the bank reconciling items? Explain by giving
an example on one of the
items?
_________________________________________________
_____________________________
_________________________________________________
_____________________________
5. What are the common causes of discrepancy between
cash balance per book and
bank? Explain each.
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 LET’S CHECK YOUR
KNOWLEDGE! YOU MIGHT
ALREADY KNOW THEM.
Choose the letter of the best answer.
Write the chosen letter on a separate
sheet of
paper.
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1. It is a statement prepared to reconcile
the difference between cash book and bank
balance.
A. Bank Statement
B. Bank Reconciliation Statement
C. Income Statement
D. Financial Statement

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 • 2. How many reciprocal accounts should be reconciled
in a bank reconciliation?
• A. 1
• B. 2
• C. 3
• D. 4

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 • 3. After all the adjustments are made, what should be
the result of the reciprocal
• accounts?
• A. Different balance
• B. Same balance
• C. Unpredicted Balance
• D. Zero balance
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 • 4. Bank reconciliations statement prepared __________ to
show that the cash balance
• per book and bank records has no discrepancy.
• A. Annually
• B. Daily
• C. Monthly
• D. Quarterly

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 •5. These are items added made by the
bank but not yet recorded by the
depositor.
A. Credit Memo B. Debit Memo
C. Deposit in Transits D. NSF
Checks
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• 6. A cash or check deposit is recorded by
the company but not recorded by the bank
that deposited after the cut-off.
A. Credit Memo
B. Debit Memo
C. Deposit in Transits
D. NSF Checks

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 • 7. These are items deducted made by the bank but not yet
recorded by the depositor.
• A. Credit Memo
• B. Debit Memo
• C. Deposit in Transits
• D. Outstanding Checks

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 • 8. Which is not a bank reconciling items?
• A. Bank errors
• B. Deposit in Transits
• C. NSF Checks
• D. Outstanding Checks
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 • 9. Which is not a book reconciling
items?
A. Credit Memo
B. Debit Memo
C. NSF Checks
D. Outstanding Check

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 • 10. Which is a book reconciling items?
A. Bank Errors
B. Deposit in Transit
C. Auto Debit
D. Outstanding Checks

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 • 11. Which of the following is not an example of a Credit
Memo?
• A. Bank Service Charge
• B. A collection made by the bank
• C. Interest Income earned by the account holder
• D. Proceed from loan added by the bank

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 • 12. Which of the following is an example of a Debit Memo?
• A. Automatic payments of bills on behalf of the account
holder
• B. A collection made by the bank on behalf of the account
holder
• C. Deposit in Transit
• D. Outstanding Checks

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• 13. Why is bank reconciliation being prepared?
A. To gather data from the company’s record
and bank statement
B. It explains the difference between the
reposted cash balance per book and bank
C. Provide information for adjusting journal
entries
D. For reporting
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 • 14. Items that are erroneously recorded by
the company.
A. Book errors
B. Bank errors
C. Collection by the banks
D. Payments of Loan

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 • 15. Items that are correctly recorded by
the company but erroneously recorded by
the bank
A. Book errors B. Bank error
C. Collection by the banks D. Payments
of Loan

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 WORD SEARCH! It will boost your brain.

• Search the corresponding word to identify what is asked below. Write your answer
on
a separate sheet of paper.
1. What are checks that have been issued by the company but have not yet
presented to the bank?
2. What check was received and then recorded by the company but not deposited
in the bank
due to the cut-off time?
3. An example of this fee is a check printing deducted from the company's bank
account. What kind of check is it?
4. What is the amount added to the company's bank account made by the bank?
5. What is the amount deducted from the company's bank account made by the
bank?

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Assessment 1 CROSSWORD PUZZLE

Solve the crossword puzzle. It will enhance your speed in thinking

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 • Fill in the blank of the correct answer by answering the crossword puzzle
• provided above. Write your answer on a separate sheet of paper.
• Down:
• 1._______ ex. payment of loans
• 2. NSF is no sufficient ________
• 3. Deposit in ___________
• Across:
• 4. _________ex. interest income
• 5. time difference and ________
• 6. compared ________ reciprocal
• account
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 Presenter
name

Email address

Website

Thank you
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