CHAPTER 11 BANK STATEMENTS I.E. UPDATING THE CASH BOOK AND BANK RECONCILAIATION STATEMENTS.

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Presentation transcript:

CHAPTER 11 BANK STATEMENTS I.E. UPDATING THE CASH BOOK AND BANK RECONCILAIATION STATEMENTS

2 R. Delaney Bank statements A bank statement is a copy of the bank’s record of a customer’s transactions with the bank. It is sent to the customer periodically by the bank. This should be compared with the customer’s cash book.

3 R. Delaney Comparing Bank Statements with Cash Book When comparing the bank statement with the cash book you should draw up two lists: 1.A list of the items that are in the bank statement that are not in the cash book. This is used to bring the cash book up to date 2.A list of the items that are in the cash book that are not in the bank statement. This is used to draw up the Bank Reconciliation Statement

4 R. Delaney Example: Question No. 6 page 112 The list of the items that are in the bank statement but not in the cash book – 3rd. Direct Debit ESB, €95 (Dr) – 7 th. Paypath €1,000 (Cr) – 9 th. Credit transfer €500 (Cr) – 12 th. Bank charges €15 (Dr) The debit items are entered on the credit side of the Cash Correction A/C (Updated Cash Book) while the credit items are entered on the debit side

5 R. Delaney Cash Correction A/C or Updating the Cash Book CASH CORRECTION A/C AT 14/09/11 €3,825 Correct cash bal14€500CT9 €15Bank charges12€1,000Paypath7 €95DD ESB3€2,435Balance as per cash book 1 €3,935 1 st Closing balance as per cash book €2,435 3rd. Direct Debit ESB, €95 (Dr) 7th. Paypath €1,000 (Cr) 9th. Credit transfer €500 (Cr) 12th. Bank charges €15 (Dr)

6 R. Delaney Bank Reconciliation Statement (1) The list of the items that are in the cash book but not in the bank statement 10 th. Cheque No. 3 € th. Cheque No. 4 € th. Lodgement €1,000

7 R. Delaney Bank Reconciliation Statement (1) 14th. Lodgement €1,000 10th. Cheque No. 3 €350 12th. Cheque No. 4 €215 €3,825Correct cash balance €565€215Cheque No. 4 €350Cheque No. 3 Less cheques not yet presented €4,390 €1,000Lodgement of 14th Plus lodgements not credited €3,390Balance as per bank statement

8 R. Delaney Bank Reconciliation Statement (2) 14th. Lodgement €1,000 10th. Cheque No. 3 €350 12th. Cheque No. 4 €215 €3,390Balance as per bank statement €565€215Cheque No. 4 €350Cheque No. 3 Plus cheques not yet presented €2,825 €1,000Lodgement of 14th Less lodgements not credited €3,825Correct cash balance