Instructions for a Bank Reconciliation Statement
Love Thy Pets Inc., Bank Reconciliation December 31, 2011
Cash balance per bank statement:
$X,XXX
Add: Deposit in transit
X,XXX X,XXX
Less: Outstanding check(s): Check No. XXX
$X,XXX
Check No. XXX
X,XXX
Check No. XXX
XXX
Adjusted cash balance per bank
X,XXX $X,XXX
Cash balance per book:
$XX,XXX
Add: Collections of note receivable plus interest less service fee EFT (electronic funds transfer)
$X,XXX XXX
Interest earned
XX
Direct Deposit(s)
XXX
IRS refund check
XXX
Book error(s)
XXX
X,XXX XX,XXX
Less: Check redeposit
X,XXX
Service charges
X,XXX
Online fees
X,XXX
Overdrafts
XXX
Automatic payments
XXX
Stop payments
XXX
NSF checks
XXX
Book error(s) Adjusted Cash balance per books
MJC 1/2013
XX
XX,XXX $X,XXX
Page 1
Instructions for a Bank Reconciliation Statement Systematic Instructions Always start with the three-line header, which includes the name of the corporation, the title of o f the statement, and the end date for the fiscal period for which the statement is being prepared.
Cash Balance per Bank Statement Section: 1. In the right hand column, place the ending balance from the bank statement. You will find this dollar amount in two places on the bank statement. One is “Balance This statement.” Two is the
balance on the last day of the month from the daily balance. Title this line “ Cash balance per bank statement:” in the left hand column. 2. On the next line, place the t he line title “Add:” No dollar amount is required for this line. 3. The first item to look for is a “Deposit in Transit.” You compare the deposits on your bank statement with the deposits recorded in your checkbook register or your cash receipts journal. Only deposits that are entered in your records and not on the bank statement are in transit. Place any dollar amounts in the far right hand column. Place the line title “Deposit in transit” in the left hand column indented. If a prior month’s Bank Reconciliation Statement is provided, always start with the deposit in transit from the statement when checking off deposits that have cleared the bank. Lastly always check the amounts to make sure all deposits were recorded for the correct dollar and cent amount (Note: check the amounts carefully to find book error(s). It could be as simple as two numbers switched.) “L ess:” in the left hand column. 4. On the next lin e, place the line title “Less:”
5. Next, look for outstanding checks. Compare the bank statement with your check register or the cash payments journal. Checks that are entered into your records but not on the bank statement are outstanding. If a prior months Bank Reconciliation Statement is provided the first thing to do is to check off the checks that have cleared from the outstanding check from the prior month. Any check(s) that did not clear are still outstanding. Place the line title “Outstanding Check(s):” in the left hand column after which place the check number(s) in order.
Place the dollar amounts of each check in the middle column. 6. Total all outstanding checks. Place Place the dollar amount on the same line as the last check in the right hand column. 7. The last line for this section will have the line title “Adjusted cash balance per bank” in the left hand column. In the right hand column, place the dollar amount, which results from subtracting the total of outstanding checks from the dollar amount arrived at by adding the beginning balance to any deposit(s) in transits. transits. Double underline underline the final total for this section.
MJC 1/2013
Page 2
Instructions for a Bank Reconciliation Statement Cash balance per book section: 1. The first line of this section will have a line title of “Cash balance per book:” placed in the left hand column. You will find this amount in your checkbook register from your ending balance. The other way to find this dollar amount is to take the beginning of the month balance from your cash account than add your total dollar amount from cash receipts for the current month and subtract your total dollar amount from cash payments for the current month. Place the resulting dollar amount in the right hand column. 2. Next go through the list of items to add to this balance and record any that are on your bank statement. If any of the following items are not on the bank statement than you do no need to record them on the bank reconciliation statement. They are as follows: a. EFT (electronic funds transfer) money transferred transferred into the account a ccount for other accounts. Money taken from a checking account and placed into a saving account. b. Notes collected these are accounts receivable owed to your company by a customer. The bank collects the not plus any interest minus any collection fee that the bank charges. c.
Interest earned some bank accounts will pay you interest for keeping a minimum balance in your account.
d. Direct Deposit this is an amount deposited into the account on a regular basis. Often used for contractual agreements or pay checks. e. Book errors this is where an error has been made in recording a deposit or a check by your company. 3. Total all of step two and place that amount in the far right hand column. Then add it to the beginning balance. 4. Next, go through the list of items to subtract from the balance and record any that are on your bank statement. If any of the following items are not on the bank statement than you do not need to record them on the bank reconciliation statement.
MJC 1/2013
Page 3
Instructions for a Bank Reconciliation Statement
They are as follows: a. ATM withdrawals: amounts of money withdrew from the account using a plastic debit or credit card. b. Automatic withdrawals: amounts of money that the person or company authorized for the payment of bills or other items. c.
Check redeposit: a check(s) may be redeposit into a company’s account for the
following reasons: Duplicate payment, unavailable merchandise, incorrect amount, conference cancelled, missed conference for which you were registered, overpayment of shipping charges, and entertainer did not perform. d. Service charges: charges from the bank for services performed for the company. e. Online fees: charges for services provide to an online banking customer such as your company. f.
Overdrafts: a service provided by the bank where if your company’s account balance
goes into the negati ve the bank will still honor the company’s checks. g. Automatic payments: a service provided by the bank where your monthly bills will automatically automatically be paid from your account. h. Stop payment: The fee charged by the bank to stop the the payment of a check when it is present to a bank. This is done in cases where the check has be destroyed, lost, or stole. i.
NSF check: When someone writes writes you a check and the money to pay the check is not in
j.
their bank account. Book error: errors in recording either deposits or checks.
5. Total all of the item in (4) and place the amount in the far right hand column. Next subtract that amount from the subtotal. The title for this line will be, “Adjusted cash balance per books.” Notes: The adjusted cash balance per bank must equal the adjusted cash balance per books for the bank reconciliation statement to be correct and complete. Don ’t forget your dollar signs and double underlines. Always check to see that the checks the bank cleared on your account are from your company and not another company with a name and address that looks the same as your company’s name.
MJC 1/2013
Page 4
