\u00a0WEEK 3 \u2013 4<\/p>\n
CONTENTS<\/p>\n
\u00a0When the entries on a bank statement are compared to those in the bank account in the cash book it will be found that they are recorded on opposite sides of the account.
\nIt is important to compare the Bank Statement and the bank account in the Cash Book. The balance on the bank account may not agree with the balance on the Bank Statement at any particular date.
\nWhen the balances in the Cash Book and Bank Statement do not agree, it is necessary to reconcile them to explain why the difference have arisen . The bank reconciliation will show the correct balance to be used as the figure for cash at bank.<\/p>\n
\u00a0<\/p>\n
STEP 1 : Compare the entries in the bank account in the Cash Book with the Bank Statement. The debit side of the bank account should be compared with the credit side of the Bank Statement and the credit side of the bank account compared with the debit side of the Bank Statement. Put a tick ( ) against those items that appear in both the Cash Book and the Bank Statement.<\/p>\n
\u00a0
\n\u00a0
\n\u00a0STEP 2: Update the Cash Book (i.e. prepare an Adjusted Cash Book)<\/p>\n
NB: This new Cash Book balance is the correct bank balance. If it is the end of the financial year, this is the balance which should appear in the Balance Sheet.
\nSTEP 3 : Prepare a Bank Reconciliation Statement.
\nThis should show why the balance on the up-dated Cash Book does not agree with the balance shown on the Bank Statement.<\/p>\n
NB: It is possible to start the bank reconciliation statement with the balance as per the Bank Statement. In this case, it is necessary to reverse the items (b), (c) and (d) listed above. \u00a0 \u00a0Solution: N N \u00a0<\/p>\n N N \u00a0 Less: Uncredited Cheques: Michael 155 \u00a0 \u00a0<\/p>\n EVALUATION QUESTIONS<\/p>\n READING ASSIGNMENT<\/p>\n GENERAL EVALUATION QUESTIONS<\/p>\n WEEKEND ASSIGNMENT<\/p>\n Use the following information to answer questions 2 and 3 THEORY<\/p>\n \u00a0WEEK 3 \u2013 4 TOPIC : BANK RECONCILIATION STATEMENT CONTENTS STAGES OF BANK RECONCILIATION WORKING…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,215],"tags":[],"class_list":["post-2589","post","type-post","status-publish","format-standard","hentry","category-posts","category-third-term-ss1-financial-accounting"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2589","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/comments?post=2589"}],"version-history":[{"count":2,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2589\/revisions"}],"predecessor-version":[{"id":2591,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2589\/revisions\/2591"}],"wp:attachment":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/media?parent=2589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/categories?post=2589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/tags?post=2589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nA bank reconciliation statement does not form part of the double entry records of the business. It is a statement which shows that, on a certain date, the bank account and the bank statement were reconciled.
\nEVALUATION QUESTIONS
\n<\/strong><\/p>\n\n
\n\u00a0
\n\u00a0
\n\u00a0
\n\u00a0Illustration
\nThe following Bank Account and Bank Statement relate to the firm of Mahmoud and Sons Enterprises for the period 1st to 30th September, 2017.
\n Bank Account
\n2017 N 2017N
\nSep 1 Balance b\/d 6,000 Sep 5Cheque – Owen 400
\n ” 10 Cash 500 ” 12Cheque – Peter 150
\n ” 14 Cheque – Kuku 85 ” 15 Cheque – Ringo 105
\n” 20 Cheque – Labi 220 ” 26 Cheque – Smith 365
\n ” 27 Cheque – Michael 155 ” 28 Cheque – Thomas 1,120
\n ” 29 Cheque – Ndidi 360 ” 30 Balance c\/d 5,180
\n 7,320 7,320
\nBank Statement as at 30th September, 2017
\n Debit Credit Balance
\n 2017 N N N
\n Sep 1 Balance b\/f 6,000
\n ” 8 Cheque No. 5988762 400 5,600
\n ” 10 Cash 500 6,100
\n ” 16 Cheque deposits 85 6,185
\n ” 20 Cheque No. 5988763 150 6,035
\n ” 21 Cheque dishonoured 85 5,950
\n ” 24 Cheque deposits 220 6,170
\n ” 25 Credit Transfers – Umoru 600 6,770
\n ” 28Standing order 560 6,210
\n ” 29 Cheque No. 5988764 105 6,105
\n” 30 Bank charges 20 6,085
\nYou are required to prepare: <\/p>\n\n
\nMahmoud and Sons Enterprises:<\/p>\n\n
\n Balance b\/d 5,180 Dishonoured Cheques 85
\n Credit Transfers 600 Standing Order 560
\n Bank Charges 20
\n Balance c\/d 5,115
\n 5,780 5,780\n<\/li>\n<\/ol>\n\n
\n Balance as per Cash Book 5,115
\n Add: Unpresented Cheques: Smith 365
\n Thomas 1,120
\n 1,485
\n 6,600<\/p>\n
\n Ndidi 360
\n 515
\n Balance as per Bank Statement 6,085<\/p>\n
\n\u00a0ADVANTAGES \/ PURPOSE \/ USES OF BANK RECONCILIATION<\/p>\n\n
\n
\n
\n
\n
\n
\n
\n N
\n Balance as per Cash Book 18,000
\n Dishonoured Cheques 1,200
\n Bank Charges 300
\nUnpresented Cheques 2,400\n<\/li>\n\n