Summary of Post
Every business keeps its bank transactions in an account called bank account usually in the name of bank and account number. In the same manner bank also create a record for the same account in their books of accounts in the name of customer. At the end of every month bank emails bank statement to their customer. The account balance of both the customer and bank should tally.But in most case it do not happen due to various reason. In order to agree both the balance we prepare bank reconciliation statement. The same is applicable for a regular bank account like current account, savings accounts. Overdraft bank reconciliation is also be done apart from normal account.
You can learn how to prepare a bank reconciliation in our earlier article. Here we are checking a bank reconciliation statement example.
Examples of Bank Reconciliation.
Let’s consider the following bank ledger in the books of depositor with the depositor ledger maintained at bank.
The ledger of Omni International maintained by the banker
|Bank Statement Of Omni International|
|Account With Standard Chartered Bank|
|Date||Particulars||Withdrawals(Dr)||Deposits ( Cr)||Balance|
|8||Issued to Supplier A ( Cheque NO 12345)||180||7440|
|12||Cheque Deposited from Customer A)||150||7590|
|16||Cheque Deposited from Customer B)||1180|
|16||Issued to ABC Ltd( Cheque No 12346)||1500||7270|
|22||A. Ltd ( Cheque No 12347)||860||6410|
|26||Wages ( Cheque No 12348)||950||5460|
|28||Cheque Unpaid ( Customer A)||150||5310|
The bank account in the books of Omni international
|Bank Account Of Omni International|
|Standard Chartered Bank|
|1-Sep||Issued to Supplier A ( Cheque NO 12345)||180||7440|
|12-Sep||Cheque Deposited from Customer A)||150||7590|
|16-Sep||Cheque Deposited from Customer B)||1180||8770|
|12-Sep||Issued to ABC Ltd( Cheque No 12346)||1500||7270|
|19-Sep||A. Ltd ( Cheque No 12347)||860||6410|
|26-Sep||Issued to DFP Cheque No 12349||220||6190|
|28-Sep||Issued to XYZ||1090||4150|
|28-Sep||Cheque from Customer C||2160||6310|
Compare the bank statement with the bank ledger
On 28 September 2016,the balance shown by the Omni International ledger is 6310,where as the balance shown by the passbook on the same date is 5270. What are the items which have caused this difference?.To know this we should compare the entries on the debit side or receipt side of depositors account with the entries on the credit ( deposits side) of bank statement and reverse.
- Entries in both bank statement and bank ledger do not bring about a difference.
- It is the entry which appear in one book but not in other that is cause of difference.
Causes of difference in bank ledger of depositor and bank statement
- Customer C’s cheque 2160 paid into bank on 28th sep and,entered on the bank account of the Omni international has not been credited in the bank statement.
- Cheque Issued to DFP 220 has not yet been cashed.
- Cheque Issued to XYZ 1090 also is not cashed.
- In the bank statement there is a debit of 150 for cheque unpaid ( Customer A’s cheque credited by bank on 12 sept being written back on dishonor).
- In the passbook there is another debit of 40 of bank charges.
It can be seen that the first three items appear in the Cash Book but not in the pass book, and the next two items appear in the pass book but not in the cash book.
How to reconcile bank ledger balance with bank statement
After Ascertaining the causes of disagreement we try to reconciling or agreeing the two balances by removing the causes of such disagreement.For example when Customer C’s cheque was paid into bank the bank account balance of Omni international increased.But the bank statement balance remained the same.So the amount of the cheque (Rs 2160) should be added to the passbook balance in order to make it agree with the cash book balance.
In the case of Item No 2 and No 3,When these cheques were issued the cash book balance was reduced,but since they have not been presented for payment the bank statement balance was not affected.These two amounts 220 & 1090 must,there for be deducted from the bank statement balance to make it agree with the bank ledger balance.
Item No 4 & 5 are debits in the bank statement which have not been carried out in the bank ledger of depositor,only the passbook balance stands reduced by these amounts.So these amounts should be added to bank statement balance to make it equal to the bank ledger.
When all these adjustments are made to the bank statement balance we get bank ledger balance in depositor’s book.
Preparation of Bank Reconciliation statement
|Onmi International Pvt Ltd|
|Standard Chartered Bank|
|Bank Reconciliation Statement As on 28 September 2016|
|Bank balance as per bank statement||5270|
|Add cheque paid into bank but not credited in the bank statement||2160|
|Add cheque unpaid ,being paid in and credited by bank but later dishonored||150|
|Add bank charges debited in the bank statement but not in the bank ledger||40||2350|
|Less Cheque issued but not cashed by DFP||220|
|Less Cheque issued but not cashed by XYZ||1090||1310|
|Bank Balance as per cash book||6310|