LESSON 5-2 Bank Reconciliation 4/23/2017 LESSON 5-2 Bank Reconciliation Original created by M.C. McLaughlin, Thomson/South-Western Modified by Deborah L. Burns, Johnston County Schools, West Johnston High School GREEN

BANK STATEMENT page 124 A report of deposits, withdrawals, and bank balances sent to a depositor by a bank is called a bank statement The bank stamps the checks to indicate the checks are canceled & are not to be transferred further Canceled checks may be returned to a depositor with a bank statement or may be kept on record by the bank LESSON 5-2

BANK RECONCILIATION ADJUSTMENTS page 124 A bank’s records & a depositor’s records may differ for several reasons: A service charge may not have been recorded in the depositor’s business records Outstanding deposits may be recorded in the depositor’s records but not on a bank statement Outstanding checks may be recorded in the depositor’s records but not on a bank statement A depositor may have made math or recording errors LESSON 5-2

BANK STATEMENT RECONCILIATION A bank statement is reconciled by verifying that information on a bank statement & a checkbook are in agreement Reconciling immediately after receiving the statement is an important aspect of cash control Look for differences between what’s on the books and what’s on the statement LESSON 5-2

BANK STATEMENT RECONCILIATION page 125 1. Date 1 2. Check Stub Balance 2 5 3. Service Charge 4. Adjusted Check Stub Balance 6 3 7 5. Bank Statement Balance 6. Outstanding Deposits 8 4 9 7. Subtotal 8. Outstanding Checks 10 9. Adjusted Bank Balance 10. Compare Adjusted Balances LESSON 5-2

RECORDING A BANK SERVICE CHARGE ON A CHECK STUB page 126 Although the business does not write a check for a bank service charge, this cash payment must be recorded in the accounting records as a cash payment A record of a bank service charge is made on a check stub LESSON 5-2

RECORDING A BANK SERVICE CHARGE ON A CHECK STUB page 126 1. Write Service Charge $8.00 on the check stub under the heading “Other.” 2. Write the amount of the service charge in the amount column. 3. Calculate and record the new subtotal on the Subtotal line. 1 2 3 LESSON 5-2

JOURNALIZING A BANK SERVICE CHARGE page 127 Because the bank service charge is a cash payment for which no check is written, a memorandum is prepared as the source document Since service charges are relatively small & occur only once a month they are recorded as a miscellaneous expense LESSON 5-2

JOURNALIZING A BANK SERVICE CHARGE page 127 August 31. Received bank statement showing August bank service charge, $8.00. Memorandum No. 3. 2 1 4 3 1. Write the date. 2. Write the title of the account debited. Record the debit amount. 3. Write the title of the account credited. Record the credit amount. 4. Write the source document number in the Doc. No. column. LESSON 5-2

TERM REVIEW page 128 bank statement LESSON 5-2