Effective Bank Reconciliation Methods and Procedures
Methods of Bank Reconciliation
A. Starting from the Bank Balance to the Company Balance
- Sum: Debits recorded by the company, not credited by the bank.
- Sum: Debits recorded by the bank, not authorized by the company.
- Subtract: Credits recorded by the company, not deducted by the bank.
- Subtract: Credits recorded by the bank, not deducted by the company.
B. Starting from the Company Balance to the Bank Balance
- Sum: Credits recorded by the bank, not debited by the company.
- Sum: Credits recorded by the company, not deducted by the bank.
- Subtract: Debits recorded by the bank, not authorized by the company.
- Subtract: Debits recorded by the company, not credited by the bank.
C. Reaching Real Balances
Based on the Company Balance
- Sum: Credits recorded by the bank, not deducted by the company.
- Subtract: Debits recorded by the bank, not authorized by the company.
Based on the Bank Balance
- Sum: Debits recorded by the company, not credited by the bank.
- Subtract: Credits recorded by the company, not deducted by the bank.
NOTE: Errors committed by the company or the bank must be corrected by the institution that made them.
Accounting Entries and Case Studies
Bank Reconciliation Example
Case Study 2
CIA: Banks: 80,000
BANKS: CIA: 93,000
All Cheap SAC
Statement of Bank Reconciliation
As of December 31, 2001
- Balance as of 31.12.01: 80,000
- Sum: Interest payment: 3,000
- Subtract: N/C billing: 2,000
- Available balance in bank: 81,000
- Balance as of bank: 93,000
- Sum: Unprocessed check (Bank Bonito): 10,000
- Subtract: Outstanding checks: 22,000
- Available balance in bank: 81,000
Adjusting Entries (31.12.01):
Telephone expenses: 2,000
Banks: 1,000
Interest earned: 3,000