What is Bank Reconciliation Statement? How to prepare it?

 

Bank Reconciliation Statement: It is a statement prepared by company to know the cause of difference between cash book bank column balance and bank pass book balance. It is prepared daily, monthly, yearly according to the requirement. With the help of this statement company can ascertain the differences by comparing one book balance with other book bank balance. If any transactions are omitted then it is written in book and if any transactions recorded wrongly by bank then it is informed by company on time or if  any transaction is recorded wrongly by company then it is corrected by company itself.

Bank Reconciliation statement format:

Bank Reconciliation Statement

As on ---------2021

Particulars	Amount	Amount
Debit balance as per cash book		---------
Add: Cheque issued but not presented for bank	----
Add: Interest, dividend collected by bank	----
Add: Amount directly deposited in bank	----
Add: Amount wrongly credited in cash book	----
		---------
Less: Directly payment made by bank	-----
Less: Cheque paid to bank for collection but not credited by bank	-----
Less: Interest charged by bank	-----
Less: Cheque issued but not recorded in cash book	-----
Less: Wrongly debited in cash book	-----
		--------
Balance as per bank pass book		-----------

 

Example: Prepare bank reconciliation statement on 31^st march 2020 with the help of given information:

·        Debit balance of cash book is Rs. 48,000

·        Cheque issued but not cleared in bank Rs. 15,000

·        Cheque deposited but not recorded in cash book of Rs. 4,500

·        Rs.1800 Amount wrongly credited in pass book.

·        Cheque deposited but not credited in bank of Rs. 2000

 

Solution:                                  Bank Reconciliation Statement

                                                    As on 31^st march 2020

Particulars	Amount (In Rs.)	Amount (In Rs.)
Debit balance of cash book		48,000
Add: Cheque issued but not cleared in bank	15,000
Add: Cheque deposited but not recorded in cash book	4,500
Add: Amount wrongly credited in pass book.	1,800
		21,300
Less: Cheque deposited but not credited in bank	(2,000)	(2,000)
Credit balance of pass book		19,300

 

Example: On 31^st December 2020 book of Deepak enterprises cash book shows credit balance of Rs. 8,000. Bank balance of Deepak enterprises cash book and bank pass book shows different balances. So, to know the reason the management decided to prepare the bank reconciliation statement with the help of given information:

·        Rs. 12,000 directly deposited in bank

·        Cheque presented in bank for payment of Rs. 5000 but not recorded in cash book

·        Interest received by bank of Rs.1,200

·        Rs. 5,000 debited by bank instead of Rs. 7,000

·        Cheque issued for collection but not credited by bank Rs. 25,000

·        Bank charges of Rs. 800

Solution:                                      Bank Reconciliation statement

                                                          As on 31^st December 2020

Particulars	Amount (+)	Amount (-)
Credit balance (Overdraft) of cash book		(8,000)
Amount directly deposited in bank	12,000
Cheque presented in bank for payment of Rs. 5000 but not recorded in cash book		(5,000)
Interest received by bank of Rs.1,200	1,200
Rs. 5,000 debited by bank instead of Rs. 7,000	2,000
Cheque issued for collection but not credited by bank Rs. 1,000		(1,000)
Bank charges of Rs. 800		(800)
Credit balance of Pass book	400