FABM | L#2

BANK RECONCILIATION STATEMENTS

CASH IN BANK

DEPOSITED ALTOGETHER

CASH PAYMENTS

MADE THROUGH CHECKS

BANK RECONCILIATION STATEMENT

PREPARED BY AN ENTITY TO RECONCILE THE CASH-IN-BANK ACCOUNT BALANCE IN THE ENTITY’S BOOK VERSUS THE BALANCE AS REPORTED BY THE BANK IN THE BANK STATEMENT

SOURCES OF DETAILS ABOUT CASH-IN-BANK

1. CASH-IN-BANK LEDGER ACCOUNT OF THE ENTITY

2. BANK STATEMENT IS ISSED BY THE BANK

LEDGER

>INCREASE IN ENTITY’S CASH > DEBIT

>DECREASE IN ENTITY’S CASH > CREDIT

BANK STATEMENT

>INCREASE IN ENTITY’S CASH > CREDIT

>DECREASE IN ENTITY’S CASH > DEBIT 

BANK BALANCE RECONCILING ITEMS

1. DEPOSIT IN TRANSIT (+)

2. OUTSTANDING CHECKS (+)

3. BANK ERRORS (+)/(-)

DEPOSIT IN TRANSIT (+)

CASH TAT HAS BEEN RECEIVED BY AN ENTITY AND WAS RECORDED IN THE CASH-IN-BANK ACCOUNT BALANCE AS A DEPOSIT

HOWEVER, THIS DEPOSIT HAS BEEN SENT TO THE BANK IS NOT YET PROCESSED AND POSTED BY THE BANK, THUS NOT REFLECTING IN THE BANK STATEMENT 

OUTSTANDING CHECKS (-)

CHECKS THAT THE COMPANY HAS ISSUED AND WAS RECORDED AS A CREDIT ENTRY IN THE ENTITY’S CASH-IN-BANK ACCOUNT

HOWEVER, THESE CHECKS WERE NOT YET PRESENTED FOR PAYMENT AND HAS NOT YET CLEARED FROM THE BANK FROM WHICH IT IS DRAWN 

BANK ERRORS (+)/(-)

ERRONEOUS DEBITS AND CREDITS BY THE BANK IN THE ENTITY’S ACCOUNT 

LEDGER BALANCE RECONCILING ITEMS

1. CREDIT MEMOS (+)

2. DEBIT MEMOS (-)

3. BOOK ERRORS (+)/(-) 

CREDIT MEMOS (+)

ITEMS CREDITED BY THE BANK TO THE BANK ACCOUNT OF THE ENTITY NOT YET RECORDED BY THE FIRM IN THEIR BOOKS

THESE INCLUDES NOTES RECEIVABLE COLLECTED BY THE BANK IN BEHALF OF THE ENTITY AND INTEREST EARNED IN PUTTING THEIR CASH IN THE BANK 

DEBIT MEMOS (-)

ITEMS CHARGED AGAISNT THE COMPANY’S BANK ACCOUNT NOT YET RECORDED IN THE COMPANY’S LEDGER

THESE INCLUDES NSF (NOT SUFFICIENT FUNDS)

IT ALSO INCLUDES BANK SERVICE CHARGES

BOOK ERRORS (+)/(-)

ERRONEOUS DEBITS AND CREDITS OF CASH IN THE ENTITY’S LEDGER