2. Content Standards
• The learners demonstrate an
understanding of a bank reconciliation
statement, its nature and structure, and
reconciling items and methods of
preparation.
UNIT 3C MY CLUB 2
3. Performance Standards
• The learners shall be able to solve
exercises and problems involving the
identification of the proper treatment of
reconciling items in the bank reconciliation
statement.
UNIT 3C MY CLUB 3
4. Learning Competencies
1. Describe the nature of a bank
reconciliation statement.
2. Identify common reconciling items and
describe each of them.
3. Analyze the effects of the identified
reconciling items
UNIT 3C MY CLUB 4
5. Introduction
• Introduce the following learning objectives:
a. I will be able to describe the nature of a
bank reconciliation statement.
b. I will be able to identify common
reconciling items and describe each of them.
c. I will be able to analyze the effects of the
identified reconciling items.
UNIT 3C MY CLUB 5
6. MOTIVATION
• 1. Review the learners on the discussion made
about the basic documents and transactions
related to bank deposits
• what is a savings account and a current account?
• Who are the parties involved in the issuance of a
check?
• What are the purposes of a bank statement.
• “Upon receipt of a bank statement, what will the
company do?”
UNIT 3C MY CLUB 6
7. 1. Nature of Bank Reconciliation Statement
It is normal for a company's bank balance as
per accounting records to differ from the
balance as per bank statement. The
difference between these figures is the
reasons why companies prepare a bank
reconciliation statement.
Bank reconciliation statement is a report
which compares the bank balance as per
company's accounting records with the
balance stated in the bank statement.
UNIT 3C MY CLUB 7
8. • A bank reconciliation is the process of
matching the balances in an entity's
accounting records for a cash account to
the corresponding information on a bank
statement. The goal of this process is to
ascertain the differences between the two,
and to book changes to the accounting
records as appropriate
UNIT 3C MY CLUB 8
9. UNIT 3C MY CLUB 9
BANK RECONCILIATION
• An organisation’s Bank Account balance
often differs from the balance shown on
the Bank Statement prepared by the
bank.
• Why?
10. :The two common causes of the
discrepancy in figures are:
• Time lags that prevent one of the parties
(company or the bank) from recording the
transaction in the same period as the other
party.
• Example: A bank statement that ends January 30,
2015 and then the company were able to
collect cash of P20,000 at 5:00 PM. Bank usually
closes at 3:00 PM because of this, the cash
collected will not be reflected in the bank as
deposit but it is however recorded in accounting
records of the company.
UNIT 3C MY CLUB 10
11. The two common causes of the
discrepancy in figures are:
• Errors by either party in recording
transactions
• Example: A check was issued to Meralco by the
company amounting to P1000. The company
recorded this as P100. When the check was
presented, the bank paid Meralco P1,000. In the
records of the company it was P100 while in the
records of the bank it’s P1,000. There is in this
case an error that will cause the difference
between the company’s records and the bank
records.
UNIT 3C MY CLUB 11
12. UNIT 3C MY CLUB 12
• Cheques paid to creditors who may hold on
to them before taking them to the bank days
later
• Deposits made into the bank on or near the
date the statement is prepared ie too late to
be included
• If so, they will be included in the next
statement
THINGS THE BANK MAY NOT KNOW YET
13. UNIT 3C MY CLUB 13
THINGS THE ORGANISATION MAY NOT
KNOW YET
• Standing orders and direct debits can be
forgotten about but the bank always
remembers them
• How much Bank Charges are - until the
bank tells them in the statement
• Deposits made straight through the bank
rather than to the organisation (BGCs)
14. UNIT 3C MY CLUB 14
THINGS TO REMEMBER
• The Bank Statement and the Bank
Account are a mirror image of each
other payments made are recorded in
the credit column of the bank account
but the bank shows them in the debit
column of the statement receipts are
shown in the debit column of the
bank account but appear in the credit
column of the bank statement.
15. UNIT 3C MY CLUB 15
HOW TO RECONCILE THE TWO
• Step 1
Find the differences by ticking off all the
matching items in the bank statement and
bank account and circle the items for
which there is no match
• Step 2
Update the bank account using the circled
items in the statement
• Step 3
Prepare a bank reconciliation statement
using the circled items in the bank account
16. UNIT 3C MY CLUB 16
STEP 1
BANKACCOUNT
DATE DETAILS DEBIT CREDIT BALANCE
01-Apr OpeningBalance 2860
06-Apr Sponsorship 250 3110
09-Apr HireofHotel 600 2510
18-Apr Donation 20 2530
26-Apr Rent 120 2410
27-Apr Subscriptions 800 3210
28-Apr SecretaryExps 305 2905
30-Apr Advertising 40 2865
BANK STATEMENT
Treasurer Snappy Camera Club
Date Description Dr Cr Balance
1Ap Op Bal 2860
6” Deposit 250 3110
13” 004223 600 2510
15” DD Bet Ph 60 2450
19” Deposit 20 2470
28” 004256 120 2350
30” Bank Chgs 10 2340
- Finding the Differences
17. UNIT 3C MY CLUB 17
STEP 2
BANK ACCOUNT
DATE DETAILS DEBIT CREDIT BALANCE
01-Apr Opening Balance 2860
06-Apr Sponsorship 250 3110
09-Apr Hire of Hotel 600 2510
18-Apr Donation 20 2530
26-Apr Rent 120 2410
27-Apr Subscriptions 800 3210
28-Apr Secretary Expenses 305 2905
30-Apr Advertising 40 2865
30 Apr DD Better Photo 60 2805
30 Apr Bank Charges 10 2795
- Updating the Bank Account
18. UNIT 3C MY CLUB 18
STEP 3
Snappy Camera Club
BANK RECONCILIATION STATEMENT AS AT 30 APRIL….
Bank Statement Balance £2340
Add Items deposited not yet shown:
Subscriptions 800
3140
Less Unpresented Cheques:
Secretary’s Expenses 305
Advertising 40 345
Corrected Bank Account Balance 2795
- The Bank Reconciliation Statement
19. UNIT 3C MY CLUB 19
KEY WORDS
a standing order
a bank giro credit
a direct debit
bank charges
deposit in Transit
a method of payment for a regular sum
to the same person, the same time every
month
similar to a standing order but the payee
instructs the bank to deduct the amount
from your account every month
a payment directly into your bank
account
the amount you pay the bank for setting
up standing orders and direct debits.
are amounts already received and recorded by
the company, but are not yet recorded by the bank.
22. UNIT 3C MY CLUB 22
Practice:
Identify whether the following independent transaction is a
book or a bank reconciling. In addition, determine the
amount of the error and state whether the amount will be
added or deducted in the preparation of the bank
reconciliation(use adjusted method):
1. Eagle Repairs received P1,500 from Jane. The
bookkeeper recorded the amount as P500.
Answer: Book. P1,000 will be added to the books.
2. Nation Bank collected from the customer of Eagle the
sum of P5,000 representing payment of the said customer to
Eagle. No entry was made in the books of Eagle.
Answer: Book. P5,000 will be added to the books.
23. UNIT 3C MY CLUB 23
3. The bank teller deducted CK 123 for P3,500 from the
account of Eagle. The said check was issued by Egles
Company a different depositor of the bank.
Answer: Bank. P3,500 will be added to bank records.
Hint: The teller had deducted the amount to the account
of eagle which should not be, thus the amount is returned
or added.
4. The bookkeeper of Eagle recorded Check No. 345 in
the Cash Disbursement Journal as P5,205. The correct
amount of the check was P5,250.
Answer: Book. P45 will be deducted in the book
records. The bookkeeper should have deducted P5,250
deductions to cash however he deducted P5,205 only,
thus the difference should be deducted
24. UNIT 3C MY CLUB 24
5. The deposits of Eagle earned interest of P100
for the month. Eagle does not have knowledge
of interest earned until it receives the bank
statement.
Answer: Book. P100 is added to the book
records. Interest income will increase the cash
in bank of Eagle.
