Bank Reconciliation Objective 4.02D Students will understand and complete the bank reconciliation process.

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Presentation transcript:

Bank Reconciliation Objective 4.02D Students will understand and complete the bank reconciliation process.

Bank Reconciliation What is a bank reconciliation? Document that shows two equal balances – Your record of your checking account – The bank’s record of your account Do they have the same $ balance? – Yes, or reconciliation is not complete! – Reconciliation helps to find/correct any mistakes in your register!

Cancelled or Cleared Checks Examples Check that has processed through the bank Payment has been deducted from drawer’s account

Outstanding Checks What is an outstanding check? Outstanding checks are checks that have not cleared (been deducted from) the bank statement balance. Need to know items outstanding in order to reconcile statement How to know if checks are outstanding: – Find out which checks are outstanding by comparing the bank statement with the checkbook register

Reconciling a Checkbook Purpose: to make sure the bank’s records agree with your records 1. Look for outstanding checks and deposits 2. Review checks, deposits, ATM activity on the bank statement to make sure that your records are correct 3. Make adjustments to the bank statement and your records to ensure that you and the bank have the same amount of money 4. Reconcile every statement upon receipt in case there are mistakes 6

Steps in a Bank Reconciliation 1.Obtain the monthly bank statement. 2.Determine checks paid. (Tick mark items) 3.Find differences between the monthly bank statement and monthly check register. 4.Calculate the adjusted balance. 5.If the balances do not agree, check the steps again and recalculate. 6.Account balances must be equal!