PROCEDURE OF PREPARING BANK RECONCILIATION STATEMENT :
A bank reconciliation statement is prepared as on a particular date for a particular period to reconcile the bank balance as per cash book with balance as per pass book by showing causes of difference between the two. The statement starts with bank balance as per cash book and then additions to and subtractions from this balance are made to arrive at the balance as per pass book. Alternate procedure is to start with bank balance as per pass book and to end up with bank balance as per cash book.
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Steps for preparing a bank reconciliation statement: (i) The cash book should be completed and the balance as per bank column on a particular date should be found out covering the period for which the statement has to be prepared. (ii) The bank should be requested to complete and send to the firm the bank pass book. (iii) Check the entries of the debit and credit sides of the bank columns of the cash book with corresponding entries on the credit and debit sides of the pass book relating to the same period. (iv) The items not tallying should be classified into common groups according to their characteristics. (v) The balance as shown by any one book (i.e. the cash book or the bank pass book) should be taken as the base. This is, as a matter of fact, the starting point for determining the balance as shown by the other book after making suitable adjustments taking into account the causes of difference. (vi) The effect of the particular cause of difference on the balance shown by the other book should be noted. (vii) In case, the cause has resulted in an increase in the balance shown by the other book, the amount of such increase should be added to the balance as per the former book which has been taken as the base. (viii) In case, the cause has resulted in a decrease in balance shown by the other book, the amount of such |
SPECIMEN OF BANK RECONCILIATION STATEMENT
(From Balance as per Cash Book)
Bank Reconciliation Statement as on….
| Particulars | Rs. | Rs. |
| Balance as per Cash Book | XXX | |
| Add : | ||
| Cheques issued but not yet presented for payment | XXX | |
| Interest allowed by the bank | XXX | |
| Direct payment by customers into bank | XXX | |
| Interest on investment received by the bank | XXX | |
| Dividend on shares collected by the bank | XXX | |
| Rebate on bills retired under rebate through the bank but full amount entered in the cash book | XXX | |
| Any wrong credit in the pass book | XXX | XXX |
| XXX | ||
| Less : | ||
| Cheques deposited with the bank but not yet collected | XXX | |
| Bank charges | XXX | |
| Insurance premium paid by the bank | XXX | |
| Interest on overdraft charged by the bank | XXX | |
| Dishonoured cheques / bills | XXX | |
| Drawings made but not entered in the cash book | XXX | |
| Cheques received entered in the cash book but not yet deposited XXX | XXX | |
| Any wrong debit in the pass book | XXX | XXX |
| Balance as per Pass Book | XXX |
Note: If the reconciliation statement has been started with balance, as per the pass book, to arrive at balance as per cash book the entries made above should be reversed i.e. all added items should be deducted and deducted items should be added.
| SUMMARY PREPARATION OF BANK RECONCILIATION STATEMENT
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| Transactions | Starting with the Bank Balance as per Pass Book |
Starting with the Bank Balance as per Cash Book |
| Cheques issued but not presented | Deduct : The amount of unpresented cheques. | Add : The amount of unpresented cheques. |
| Cheques deposited but not yet collected | Add : The amount of cheques deposited | Deduct : The amount of cheques deposited |
| Cheques received and entered in the bank column of the cash book but not deposited | Add : The amount of cheques. | Deduct : The amount of cheques. |
| Dishonour of cheques deposited with banks earlier | Add : The amount of dishonoured cheques | Deduct : The amount of dishonoured cheques |
| Collection of interest and dividends and interest allowed by the banker not yet recorded in the cash book. | Deduct : The amount of these items | Add : The amount of these items. |
| Bank charges | Add : The amount of bank charges | Deduct : The amount of bank charges. |
| Balance | Bank Balance as per Cash Book | Bank Balance as per Pass Book |