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Usually a copy of depositor's account is provided by the bank to the depositor, which is called 'pass
book'. This book is written by the bank. After suitable intervals the depositor submits the pass book to
the bank and the bank in turn returns it to the depositor after recording the transactions there in.
Name of Business
Bank Reconciliation Statement
As on 31st Jan...........
Bank reconciliation statement may be started with either cash book balance or pass book balance. If it
is started with cash book balance, it will be finished with pass book balance and if it is started with pass
book balance, it will be finished with cash book balance.
After heading, the balance given to us should be written in the following way:
The causes of disagreement are added with or deducted from the starting balance to get balance of the
other book.
Usually the cash book shows a debit balance (a favorable balance for depositor) and the pass book
shows a credit balance (a favorable balance for depositor).
The bank reconciliation statement is a statement showing causes of disagreement between the cash
book balance and pass book balance on a specific date, so while preparing it only those items should be
considered which cause disagreement up to that specific date. For example, a checks for $2,000 were
sent to bank for collection on 20th December, out of these $1,100 were collected and credited by the
bank up to 31st December. The statement was prepared on 31 December. The collected checks were
only $1,100 and un-collected checks were $900 which caused disagreement between two balances, so
checks for $900 (being not collected) were considered only while preparing the bank reconciliation
statement.
Example:
From the following particulars, prepare a bank reconciliation statement of Mr. N as on 31st December
2005.
Solution:
Mr. N
Bank Reconciliation Statement
As on 31st Jan...........
$ $
Bank balance as per cash book Dr. 64,000
Less:
Checks deposited but not yet collected
40,400
by the bank
Bank charges debited in pass book 100 40,500
23,500
Add:
Checks issued but not yet paid by the
26,000
bank
Interest credited by the bank in pass
500 26,500
book
Mr. N
Bank Reconciliation Statement
As on 31st Jan...........
$ $
The balance as per pass book Cr. 50,000
Less:
Checks issued but not yet paid by the bank 26,000
Interest credited by the bank but not entered in
500 26,500
the pass book
23,500
Add:
Checks deposited but not yet collected by the
40,400
bank
Bank charges debited but not entered in the cash
100 40,500
book
It may be noted from the above two statements that the causes of disagreement which are added in the
first method are deducted in the second method.