CHAPTER 3 : BANK RECONCILIATION STATEMENT

1. Bank reconciliation is a process explain the difference between the cash book balance
with bank statement.

2. Usually bank reconciliation statement is been prepare on monthly basis.

3. The objective of bank reconciliation :-

a) identify the difference between cash book and the bank statement
b) balance the amount of the cash book with bank statement
c) there is no discrepancy balance between cash book balance with bank statement.

3. The factor or the reason why cash book balance are differ with bank statement due to
several reason. The reason are:

ITEM
1. Unpresented cheques
2. Uncredited deposit
3. Bank charges
4. Bank or credit transfer
5. Standing orders
6. Dishounor cheque
7. Technical error
EXPLAINATION
 Those cheque has been paid by company and recorded
in the cash book but the transaction doesn’t appear in
bank statement yet.
 Cash or cheque deposit received by the company.
Already recorded in cash book but doesn’t recorded yet
in bank statement.
 Such as bank charges,cheque book charges, service
charge. The charges recorded in bank statement but not
in the business’s cash book.
 Cash deposit or cheques received behalf of the business
by the bank. This transactions will recorded in bank
statement but doesn’t appear in cash book of the
business.
 Payment instructions given by the business to the bank
for certain times. This transactions will recorded in
bank statement but not in the cash book.
 Cheque issued by the business has been return back to
the business as a technical error in the cheque details.
Cheque return is doesn’t mean cheque bounce.
 It can be classified into two types, errors in cash book
or error in bank statement.
 Error in cash books occur when the bookeeper has
made a mistake such as wrongly recorded the amount.
The error mostly happen in the cash book
 Error in bank statement seldom happen but it can be
happen due to technical problem from the bank.
BANK RECONCILIATION FORMAT (WITHOUT ADJUSTING CASH BOOK)

RM RM
BALANCE IN CASH BOOK XXX
Add (+) :
UNPRESENTED CHEQUES XXX
DIVIDEND FROM INVESTMENT XXX (+)
CREDIT TRANSFER XXX
TECHNICAL ERROR
(OVERSTATE CASH OUTFLOW /UNDERSTATE CASH INFOW) XXX XXX
XXX
Less (-) :
UNCREDITED CHEQUES XXX
BANK CHARGES XXX
DISHONOUR CHEQUE XXX
(-)
PAYMENT MADE BY BANK XXX
STANDING ORDER XXX
TECHNICAL ERROR
(UNDERSTATE CASH OUTFLOW / OVERSTATE CASH INFLOW) XXX (XXX)
BALANCE AS PER BANK STATEMENT XXX

BANK RECONCILIATION FORMAT (WITH ADJUSTING CASH BOOK)

Cash Book
RM RM
Bal b/d XXX BANK CHARGES XXX
DIVIDEND FROM INVESTMENT XXX DISHONOUR CHEQUE XXX
TECHNICAL ERROR TECHNICAL ERROR XXX
(OVERSTATE CASH OUTFLOW XXX (UNDERSTATE CASH OUTFLOW /
/UNDERSTATE CASH INFOW) OVERSTATE CASH INFLOW)
CREDIT TRANSFER XXX STANDING ORDER XXX
BAL C/D aaa

Adjusted balance from cash Book aaa

Add :
Unpresented cheque XXX
XXX
Less:
Uncredited deposit (XXX)
Balance as per bank Statement XXX
 Example 1

1.) Zamil Enterprise bank statement for May 2013 shown difference amount with company
cash book for that month. The following are cash book and bank statement May 2013

Cash Book (bank extract)

Date Details Amount Date Details Chq No. Amount

May2013 RM May 2013 RM
1 Bal b/d 25730 5 Furniture 612601 1790
4 Sales 3670 8 Purchase 612602 6450
9 Commission 450 17 Syarikat Wah 612603 4350
18 Karim 1200 21 Purchase 612604 1020
26 Faris 1670 28 Salary 612605 800
30 Liew 1460 30 Pembekal Dee 612606 4200
31 Kedai Zee 2690 31 Bal c/d 18260
36870 36870

Bank Statement

Date Description Chq No Debit Kredit Balance

May 2013 RM RM RM
1 Opening Balance 26,580
2 Cheque 612600 850 25,730
6 In House Cheque 811890 3,670 29,400
7 Cheque 612601 1,790 27,610
9 Deposit 450 28,060
10 Cheque 612602 6,450 21,610
19 Cheque 612603 4,530 17,080
20 InterBank Cheque 167519 1,200 18,280
21 Dividen – Syarikat Indi 600 18,880
31 Cheque 612604 1,020 17,860
Charge Bank – Cheque Book 25 17,835

Additional Information:

i.) Cheque No 612603 wrongly recorded in cash book

ii.) Cheque received from Liew on 30 Mei 2013 has been declared as dishonour cheque
Example 2

Cash Book of Jill Jewel showed debit balance of RM 14,800 on 30th June 2016. The bank
statement for the month of June 2016 showed a credit balance RM 20,800. After a while the,
there is few transaction that not been recorded in Bank Statement and cash book. There are:

a.) Bank charges were RM 80

b.) Payment for RM 2,040 made by customer, Gems Incorporated was made directly
into the Jill Jewel bank account but didn’t showed in cash book
c.) Cheques amounted RM 4.040 had not been prenseted to the bank.

Prepare a bank reconciliation statement for the business as at 30 June 2016