CDA COLLEGE ACC101: BOOK KEEPING II Lecture 10 Lecture 10 Lecturer: Kleanthis Zisimos

Lecture Topic List Bank Reconciliation statement Bank Reconciliation statement

Quick review on Bank account What is a bank account? What is a bank account? Is it a current asset or a fixed asset? Is it a current asset or a fixed asset? Debit or credit side? Debit or credit side? Recording transactions to the bank account Recording transactions to the bank account

What is a bank reconciliation A bank reconciliation is a comparison of a bank statement (sent monthly from your bank) with the bank account in the books of the company. A bank reconciliation is a comparison of a bank statement (sent monthly from your bank) with the bank account in the books of the company. The bank reconciliation is needed in order to identify and adjust the differences between the two statements The bank reconciliation is needed in order to identify and adjust the differences between the two statements Discussion example on the board Discussion example on the board

Differences between Bank statement and Bank account Differences between Bank statement and Bank account may occur due to the following reasons Differences between Bank statement and Bank account may occur due to the following reasons 1. Unpresented checks 2. Uncleared deposits 3. Bank charges or interests 4. Errors in recording a transaction

Bank reconciliation statement The bank reconciliation statement is computed for the correction of errors and adjustment of the differences. It has the following form The bank reconciliation statement is computed for the correction of errors and adjustment of the differences. It has the following form PART 1 Bank statement amount X Less: Unpresented checks (X) Add. Uncleared deposits X X

Bank reconciliation statement The results from part 1 should be equal with the results of part 2 The results from part 1 should be equal with the results of part 2 PART 2 Bank account amount X Less: Bank charges or interests (X) Adjustment of errors X X

Discussion Exercise On 31 March 2010 the company’s bank account showed a debit balance of € The bank statement of March which was sent by the bank had a credit balance of Make the bank reconciliation statement noting the following points On 31 March 2010 the company’s bank account showed a debit balance of € The bank statement of March which was sent by the bank had a credit balance of Make the bank reconciliation statement noting the following points 1. Bank charges € 200 were not recorded in the books 2. A check for € 1000 was not shown in the bank statem. 3. A check deposit was not cleared in the bank for A check for € 400 was not shown in the bank statem. 5. A check payment of 100 to a supplier was wrongly recorded to the books of the company as a cash payment