Bank Reconciliation Part 1

Step 1: Tick off items that appear on the bank statement as well as the cash book (known as 'matched' items)

Step 2: Update the cash book for all items that appear on the bank statement but are not currently shown in the cash book e.g. bank charges (we won't know about items like this until we receive the bank statement). Balance off the Cash Book.

Step 3: Reconciliation: start with the end date bank statement balance and; ADD: receipts shown in the cash book but are not on the bank statement yet. DEDUCT: payments shown in the cash book but are not on the bank statement yet.

The amount you end up with should be equal to the brought down balance in the Cash Book.

Category:

Education

Tags:

• bank
• reconciliation
• accountancy
• procedure

[HNI4EVER]

On the cash book, why is the 14/5 Knotwise Events particular of $179.50 already ticked from the start?

[APlusTraining]

@HNI4EVER

The balance brought forward (bal b/f) at the top of the Bank Statement is dated 17th May. The ‘Knotwise Events’ receipt and ‘The Other Realm’ payment were recorded in the Cash Book on 14th May. As they are both ticked off, this means that those particular transactions were shown on the previous period’s Bank Statement rather than the Bank Statement in this video.

We included those transactions in this video to simulate how it might work in ‘real life’ if writing up a manual cash book.

[FinalFantasyZack]

i dont understand at 1:57 where the Balance C/D of 706.18 came from?

[APlusTraining]

@FinalFantasyZack

The cash book effectively represents the bank account in the general ledger. In order to calculate what the current balance in the bank is (cash book), we have to deduct money out of the bank (Credit side - expenditure items) from the money coming into the bank (Debit side - cash sales/receipts etc.) This calculation will give us a carried down figure which we transfer to the receipts side of the cash book as a ‘balance brought down figure’.

[APlusTraining]

The brought down balance represents the amount we now have in our bank account.

If the credit side of the cash book is higher in value than the debit side (i.e. expenditure is higher than income), then the carried down balance will appear on the debit side rather than the credit side of the cash book. This is quite complicated to explain, so if you have any further questions, please do get back to us.

[dumplingandtt]

this said update the cash book balance but not in the cash book. yet the man placed them in the cash book. im confused

[APlusTraining]

@dumplingandtt Thank you for your comment, I have just added a step by step guide in to the description. I hope that helps.

[naveed15]

Realy helped me a lot to do it practically! ThumsUP!

[banwait16]

Beautiful.