1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 5-2 Bank Reconciliation

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 5-2 BANK STATEMENT page 124 A report of deposits, withdrawals, and bank balances as reported by the BANK. Reasons they may not reconcile or balance. 1. Service Chg 2. Outstanding Deposits 3. Outstanding Checks 4. Math Error

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 5-2 5.Bank Statement Balance BANK STATEMENT RECONCILIATION 1 2 3 4 5 6 7 8 9 9.Adjusted Bank Balance page 125 2.Check Stub Balance 10.Compare Adjusted Balances 1.Date 3.Service Charge 4.Adjusted Check Stub Balance 6.Outstanding Deposits 7.Subtotal 8.Outstanding Checks 10

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Bank Reconciliation Bank Reconciliation is the same thing as “Balancing Your Checkbook” Compare YOUR checkbook balance to the printed or online bank statement item by item!!! Place a checkmark by all things that AGREE Items WITHOUT a check mark are discrepancies. Canceled Checks—Checks that have been cashed and cleared through the bank No check mark? Check NOT cleared or cashed yet Outstanding deposits—Bank is unaware of deposit 4 LESSON 5-2

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 5-2 1.Write Service Charge $8.00 on the check stub under the heading “Other.” RECORDING A BANK SERVICE CHARGE ON A CHECK STUB page 126 12 3 2.Write the amount of the service charge in the amount column. 3.Calculate and record the new subtotal on the Subtotal line. Only the bank knew about this charge so you must update YOUR checkbook balance!!!

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 5-2 1.Write the date. JOURNALIZING A BANK SERVICE CHARGE page 127 14 August 31. Received bank statement showing August bank service charge, $8.00. Memorandum No. 3. 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. 2 3 This entry is necessary to bring your accounting records up to date Cash goes DOWN because the bank has already deducted the charge

7. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 5-2 TERM REVIEW bank statement page 128

8. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Audit Your Understanding 1.List four reasons why a depositor’s records and a bank’s records may differ. 2.If a check mark is placed on the check stub of each canceled check, what does a check stub with NO check indicate? 8 LESSON 5-2