Bank Statement: A bank sends a statement of account to each depositor once each month. Reconciling The Bank Statement: On receiving a bank statement, the depositor checks it immediately with his bank balance record kept on his check stubs.The procedure of such checking is called reconciling the bank statement.The balances shown by the statment and the bank account as per depositors record. Should be equal,but they are not likely to be equal on any specific date,

1- Uncredited\Uncollected checks Checks deposited may not have been collected and credited by the bank.Any check paid into bank is recorded in the cash book on the same day.But such checks are recorded by the bank only when the amounts of these checks have been collected.It is obvious that collections take some time,so the difference may arise.

2-Outstanding checks(Unpresented Checks)  S 0me 0f the checks issued during the period may not have been presented to the bank for payment before the statement was prepared.These checks are known as outstandig checks.

Bank Reconciliation Statement  T he balance at bank shown by the depositor,s record must agree with the balance shown by the bank statement.But the balances of both the records seldom agree.So a statement is prepared to find out the reasons for disagreement between the two records.The statement prepared for this purpose is called a bank reconciliation statement.

O bjectives of Bank Reconciliation Statement  1- To know the correct bank balance  2-To find out the errors if any and to correct them in time  3-For the completion of the cash records  4-To verify the payments made through checks

Bank Reconciliation Statement 1). Depositor. 2). Bank  In case of Depositor\Cash Book O verdraft\ Unfavorable Cr Favorable Dr Nothing Dr In case of Bank Statement\Pass Book Overdraft\Unfavorable Dr Favorable Cr Nothing Cr

Q.No.1-  On March 31,1987 a trader has a balance of Afs.1050 as indicated by the bank statement.He sent a check of Afs.100 on March 30, which was not collected by the bank till March 31.There were outstanding checks for Afs.150. He also sent cash Afs.200 to the bank,  Required: statement reconciling the bank balance  Q2. on april 30, 1987 a trader’s account as per bank statement is debit Rs on reference to the cash book the following items were noted: 1. Interest amounting to Afs credited by bank. 2. Bank chargers of Afs deibted in the bank statement 3. Uncredited checks Afs Unpresented checks Afs Required: statement reconciling the bank balance.

Formula for Bank Reconciliation Statement (Cash Book Dr|Fav or pass Book Dr\Unfav  A dd Items: 1- Unpresented Checks(outstanding checks) 2-Interest received \ Discount received 3-Any receivable items 4- Accounts Receivable Less items: 1-Uncollected \ uncredited checks 2- Bank charges 3- Accounts Payable 4-Any payable items 5-Interest on overdraft

Contd....  Q3. on may 31, 1987 cash book of a trader showed an overdraft of Afs on reference to bank statement the following items were noted :  Interest Afs.85 credited by the bank.  Bank charges Afs.25 debited by the bank  Checks deposited for collection not yet credited by the bank Afs  Checks passed for payment Afs had not been presented to the bank  Prepare bank reconciliation statement

Q.No.4-  On June 30,1987 a trader,s cash book showed an overdraft of Afs at the bank. On reference to the bank statement the following items were noted:  A: interest amounting to Afs had been credited by the bank, but it did not appear in the depositor,s record.  B: checks issued totalling Afs had not been presented at the counter for the payment.  C: an outstanding check for Afs. 115 banked on june 29 had not yet been collected.  D: bank charges amounting to Afs.2.50 debited by the bank, were not entered by the trader in his own record.  Required: Bank reconciliation statement.