When a cash position is presented for cash book transactions and a bank statement transactions, the following steps should be taken to reconcile the difference.
First, prepare the adjusted cash book.
This is for examination purpose only. Here, what is required is to identify the payments effected in the bank statement and receipt items captured in the bank statement but are not captured in the cash book. You have to record them in the cash book to have a new cash balance called the adjusted cash book balance.
Add the un-presented cheques to, and subtract un-credited cheques from this balance to have the balance as per bank statement.
Secondly and in practice, you may not need to prepare adjusted cash book before preparing your reconciliation. To prepare the reconciliation directly without adjusted cash book,
If you begin with cash book balance, take these steps
1. Add all receipts credited by the bank but not yet debited in the cash book
2. Less deposits or lodgments made but yet to be credited by the bank
3. Less bank and other charges by the bank but not credited in the cash book.
If you begin with bank statement balance, take these steps
1. Add deposits or lodgments made but yet to be credited by the bank
2. Add bank and other charges by the bank but not credited in the cash book.
3. Less all receipts credited by the bank but not yet debited in the cash book
First, prepare the adjusted cash book.
This is for examination purpose only. Here, what is required is to identify the payments effected in the bank statement and receipt items captured in the bank statement but are not captured in the cash book. You have to record them in the cash book to have a new cash balance called the adjusted cash book balance.
Add the un-presented cheques to, and subtract un-credited cheques from this balance to have the balance as per bank statement.
Secondly and in practice, you may not need to prepare adjusted cash book before preparing your reconciliation. To prepare the reconciliation directly without adjusted cash book,
If you begin with cash book balance, take these steps
1. Add all receipts credited by the bank but not yet debited in the cash book
2. Less deposits or lodgments made but yet to be credited by the bank
3. Less bank and other charges by the bank but not credited in the cash book.
If you begin with bank statement balance, take these steps
1. Add deposits or lodgments made but yet to be credited by the bank
2. Add bank and other charges by the bank but not credited in the cash book.
3. Less all receipts credited by the bank but not yet debited in the cash book
Comments
Post a Comment