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Bank Reconciliation Statement

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Published in: Accountancy
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Explanation on Bank Reconciliation Statement (BRS)

Sukhbinder S / Durgapur

9 years of teaching experience

Qualification: ICWA (The Institute of Road Transport Perunthurai Medical College,Perunthurai - 2013), B.Com (Burdwan University - 2011)

Teaches: Advanced Excel, GST Training, Tally ERP 9, CA - CPT, CMA Foundation, CMA Intermediate, CS - Foundation, Accountancy, Business Studies, Commerce Subjects, Costing, B.Com Tuition, BBA Tuition, BCA Tuition, BBA Entrance, BBA Subjects, Management Subjects

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  1. Bank Reconciliation Statement What is a 'Bank Reconciliation Statement' A bank reconciliation statement is a summary of banking and business activity that reconciles an entity's bank account with its financial records. The statement outlines the deposits, withdrawals, and other activity impacting a bank account for a specific period. A bank reconciliation statement is a useful financial internal control tool used to thwart fraud. Problem 1: From the following particulars prepare a Bank Reconciliation Statement to find out the causes of difference in two balances as on August 31st, 2016 for Four Star (Pvt.) Ltd. (i) Bank Overdraft as per Bank Statement . (ii) Check issued but not encashed during the August . (iii) Dividends on shares collected by banker . (iv) Interest charged by the bank recorded twice in the Cash Book . (v) Check deposited as per Bank Statement not entered in Cash Book . (vi) Credit side of the Bank column in Cash Book cast short (vii) Clubs dues paid by bank as per standing instruction not recorded in Cash Book . (viii) Uncredited check due to outstation . 17,000 2,200 2,300 500 3,400 1,000 1,200 3,900
  2. Solution: Cash Book (Bank Column Missing) Bank Statement (Missing) iii) Dividend 2,300 iv) Interest enor 500 v) Deposited 3,400 vi) Cast sh01t 1,000 vii) Dues paid 1,200 1) Balance Uncashed Check 11 17,000 2,200 viii) Uncredited 3 ,900 Four Star (Pvt.) Ltd. Bank Reconciliation Statement As on August 31 st, 2016 (Dr) i) Bank Overdraft as per Bank Statement Add: ii) Check Issued but not encashed iii) Dividend on shares collected by bank iv) Interest charged recorded twice v) Check deposited not entered cash book Less: vi) Credit side of bank column in cash book cast sli01t vii) Clubs dues paid by bank vii) Uncredited check due to outstation 2,200 2,300 500 3,400 1,000 1,200 3,900 Balance as per Cash Book (CIA) Rs. 17,000 8,400 25,400 (6, 100) Rs. 19,300
  3. Problem 14.2: From the following particulars, you are required to find out the errors in cash book and bank statement by using missing method and prepare Bank Reconciliation Statement as on 31-12-2016, for Chand Bibi Ltd (i) Bank balance overdraft as per cash book . 80,000 (ii) Check recorded for collection but not sent to the bank 10,000 (iii) Credit side of the cash book cast short 1,000 (iv) Premium on proprietor's Life Insurance Policy (LIP) paid on standing order 5,000 (v) Bank Charges recorded twice in the cash book 100 (vi) Customer's check returned by the bank as dishonored . 4,000 (vii) Bill Receivable collected by the bank directly on the behalf of company 20,000 (viii) Check received entered twice in the cash book 6,000 (ix) Check issued but dishonored on technical grounds 3,000 (x) A checks deposited into the bank of worth Rs. 45,000 but Rs. 8,000 check was not collected by bank
  4. Solution: v. Twice recording 100 vii. Direct collection 20,000 ix. Dishonored check 3.000 Cash Book i. Balance iil. Cast short so,ooo 1 ,ooo iv. Life Insurance Policy 5,000 vim Dishonored check viil. Twice recording 4,000 6,000 Chand Bibi Ltd Bank Reconciliation Statement As on December 31 st, 2016 i. Balance As per Cash Book (Cr) Add: iii. Credit side of the cash book cast sh01t iv. Premium on Life Insurance Policy paid on standing order vi. Customer's check returned by the bank as dishonored viii. Check received entered twice in the cash book ii. Check recorded for collection but not sent to the bank x. Check was not collected by bank Less: v. Bank Charges recorded tuice in the cash book vii. Bill Receivable collected by the bank directly on the behalf of company ix. Check issued but dishonored on technical grounds Balance As per Bank Statement (Dr) Bank Statement ii. Not send check x. Uncredited 1,000 5,000 4,000 6,000 10,000 8,000 100 20,000 3,000 10,000 s,ooo 80,000 34,000 114,000 (23,100) Rs. 90,900

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