Chapter 5

BANK RECONCILIATION STATEMNENT

Presentation By
Dr.K.R.Rajesh Babu
GHSS, Chala, Kannur
9447793940
 Chapter 5
BANK RECONCILIATION SATEMENT
Dr BANK COLUMN OF A CASH BOOK Cr
Date Receipt Bank Date Payments Bank
2018 2018
Jan 1 Balance b/d 5000 Jan 4 Purchase 3000
5 Cash 7000 15 Rent 4500
12 Sales 4000 22 Telephone 1200
24 Ram 6000 28 Insurance 2400
31 Balance c/d 10900

22000 22000
 Chapter 5
BANK RECONCILIATION SATEMENT
PASS BOOK
Date Particulars Cheque No. Debit Credit Balance
2018
Jan 1 Brought forward 5000
5 Cash deposit 7000 12000
7 Cheque 45238 3000 9000
14 Cheque deposit 287963 4000 13000
18 Cheque 45239 4500 8500
23 Cheque 45240 1200 7300
 Chapter 5
BANK RECONCILIATION SATEMENT
Same transactions are recorded in Bank column
of Cash Book and Pass Book.
● Balances of Cash Book and Pass Book do not
tally.
● If the balances are differ-
Compare the entries in both the books.
Items on account of which the differences has
arisen are ascertained.
To reconcile the balances of these two accounts
a Bank Reconciliation Statement is prepared.
 Chapter 5
BANK RECONCILIATION SATEMENT
CAUSES OF DIFFERENCES BETWEEN CASH BOOK & PASS BOOK

1. TIMING DIFFERENCES

a) Cheques issued but not presented for payment

● First entered on credit side of cash book of firm
● Bank debit the account when the cheque is
actually paid by the bank
 Chapter 5
BANK RECONCILIATION SATEMENT
CAUSES OF DIFFERENCES BETWEEN CASH BOOK & PASS BOOK

1. TIMING DIFFERENCES

b) Cheques paid into bank but not yet collected

● First entered on debit side of cash book of firm
● Bank credit the account when the cheque is
actually collected by the bank
 Chapter 5
BANK RECONCILIATION SATEMENT
CAUSES OF DIFFERENCES BETWEEN CASH BOOK & PASS BOOK

1. TIMING DIFFERENCES

c) Direct debits made by bank on behalf of customer

●
First debited by the bank in Pass book
● Entered in Cash book when intimation is received
from the bank
 Chapter 5
BANK RECONCILIATION SATEMENT
CAUSES OF DIFFERENCES BETWEEN CASH BOOK & PASS BOOK

1. TIMING DIFFERENCES

d) Amount directly deposited in the Bank Account

●
First credited by the bank in Pass book
● Debited in Cash book when intimation is received
from the bank
 Chapter 5
BANK RECONCILIATION SATEMENT
CAUSES OF DIFFERENCES BETWEEN CASH BOOK & PASS BOOK

1. TIMING DIFFERENCES

e) Interest and Dividend collected by Bank

●
First credited by the bank in Pass book
● Debited in Cash book when intimation is received
from the bank
 Chapter 5
BANK RECONCILIATION SATEMENT
CAUSES OF DIFFERENCES BETWEEN CASH BOOK & PASS BOOK

1. TIMING DIFFERENCES

f) Direct payments made by Bank on behalf of Customer

●
First debited by the bank in Pass book
● Credited in Cash book when intimation is
received from the bank
 Chapter 5
BANK RECONCILIATION SATEMENT
CAUSES OF DIFFERENCES BETWEEN CASH BOOK & PASS BOOK

1. TIMING DIFFERENCES

g) Cheques deposited/Bills discounted dishonoured

●
First debited by the bank in Pass book
● Credited in Cash book when intimation is
received from the bank
 Chapter 5
BANK RECONCILIATION SATEMENT
CAUSES OF DIFFERENCES BETWEEN CASH BOOK & PASS BOOK

2. DIFFERENCES CAUSED BY ERRORS

a) Errors committed in recording transaction by the firm

● Omission, Wrong entry of cheques issued/
deposited
● Wrong Totalling
 Chapter 5
BANK RECONCILIATION SATEMENT
CAUSES OF DIFFERENCES BETWEEN CASH BOOK & PASS BOOK

2. DIFFERENCES CAUSED BY ERRORS

b) Errors committed in recording transaction by the bank

● Omission, Wrong entry of cheques issued/
deposited
● Wrong Totalling
 Chapter 5
BANK RECONCILIATION SATEMENT
PREPARATION OF BRS WITHOUT ADJUSTING CASH BOOK
1. Given the heading as
“Bank Reconciliation Statement as on ......”
2. Cash book or Pass book balance should be
taken as starting point.
3. If the given balance is more than the other
balance, deduct the particular item from the given
balance.
4. If the given balance is less than the other balance,
add the particular item to the given balance.
5. The result will be the other balance
 Chapter 5
BANK RECONCILIATION SATEMENT
PREPARATION OF BRS WITHOUT ADJUSTING CASH BOOK
1. FAVOURABLE BALANCE a) Starting from Cash Book balance
BANK RECONCILIATION STATEMENT AS ON...........
Balance as per Cash book xxx
Add: Cheque issued but not presented for payment xxx
Amounts directly deposited in the Bank A/c xxx
Interest and dividend collected by bank xxx xxx
xxx
Less: Cheques paid into bank but not collected xxx
Direct debits by bank on behalf of customer xxx
Direct payments by bank on behalf of customer xxx
Cheques deposited/Bill discounted dishonoured xxx xxx
Balance as per Pass book xxx
 Chapter 5
BANK RECONCILIATION SATEMENT
PREPARATION OF BRS WITHOUT ADJUSTING CASH BOOK
1. FAVOURABLE BALANCE b) Starting from Pass Book balance
BANK RECONCILIATION STATEMENT AS ON...........
Balance as per Pass book xxx
Add: Cheques paid into bank but not collected xxx
Direct debits by bank on behalf of customer xxx
Direct payments by bank on behalf of customer xxx
Cheques deposited/Bill discounted dishonoured xxx
xxx
Less:Cheque issued but not presented for payment xxx
Amounts directly deposited in the Bank A/c xxx
Interest and dividend collected by bank xxx xxx
Balance as per Cash book xxx
 Chapter 5
BANK RECONCILIATION SATEMENT
PREPARATION OF BRS WITHOUT ADJUSTING CASH BOOK
2. UNFAVOURABLE BALANCE a) Starting from Cash Book Overdraft
BANK RECONCILIATION STATEMENT AS ON...........
Overdraft as per Cash book xxx
Add: Cheques paid into bank but not collected xxx
Direct debits by bank on behalf of customer xxx
Direct payments by bank on behalf of customer xxx
Cheques deposited/Bill discounted dishonoured xxx
xxx
Less:Cheque issued but not presented for payment xxx
Amounts directly deposited in the Bank A/c xxx
Interest and dividend collected by bank xxx xxx
Overdraft as per Pass book xxx
 Chapter 5
BANK RECONCILIATION SATEMENT
PREPARATION OF BRS WITHOUT ADJUSTING CASH BOOK
2. UNFAVOURABLE BALANCE b)Starting from Pass book Overdraft
BANK RECONCILIATION STATEMENT AS ON...........
Overdraft as per Pass book xxx
Add: Cheque issued but not presented for payment xxx
Amounts directly deposited in the Bank A/c xxx
Interest and dividend collected by bank xxx xxx
xxx
Less: Cheques paid into bank but not collected xxx
Direct debits by bank on behalf of customer xxx
Direct payments by bank on behalf of customer xxx
Cheques deposited/Bill discounted dishonoured xxx xxx
Overdraft as per Cash book xxx
 Chapter 5
BANK RECONCILIATION SATEMENT
PREPARATION OF BRS WITH ADJUSTED CASH BOOK

1. Make adjustments in Cash book for the items

entered only in Pass book, like, Interest on
deposits, Bank charges, etc.
2. Adjusted Cash book balance is obtained.
3. Reduces the numner of items in BRS
4. BRS is prepared by using the adjusted cash
book balance
 Chapter 5
BANK RECONCILIATION SATEMENT
PREPARATION OF BRS WITH ADJUSTED CASH BOOK
AMENDED CASH BOOK

Date Receipts LF Amount Date Payments LF Amount

Balance b/d XXX
Dividend XXX Bank charge XXX
Interest XXX Direct payment
Deposit by by bank XXX
Customers XXX Balance c/d XXX

xxx xxx
 Chapter 5
BANK RECONCILIATION SATEMENT
PREPARATION OF BRS WITH ADJUSTED CASH BOOK

BANK RECONCILIATION STATEMENT AS ON...........

Balance as per Cash book xxx
Add: Cheque issued but not presented for payment xxx XXX

xxx
Less: Cheques paid into bank but not collected xxx XXX

Balance as per Pass book xxx