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PART E: PREPARING A TRIAL BALANCE 

 

270

 

(b) BANK 

RECONCILIATION 

STATEMENT AT 30 JUNE 20X0 

 

 

$   

 

$  

Balance per bank statement 

 

 

 

65 

Add: outstanding lodgements 

400 

 

 

deposit interest not yet credited 

  60 

 

 

 

 

460 

 

 

 

525 

Less: unpresented cheques 

 

500 

 

 

less cheque to Jones cancelled 

 

 (25) 

 

 

 

 

475 

Balance per corrected cash book 

 

 

  50 

 

 

You might be interested to see the adjustments to the cash book in part (a) of the problem presented in 

the T-account format, as follows. 

CASH BOOK 

 

 

$   

 

 

$   

20X0  

 20X0 

  

 

Jun 30 

 

Bank interest – reversal of 

 

Jun 30 

 

Balance brought down 

 

300 

 

 

   incorrect entry 

 

60 

 

 

Bank charges 

 

35 

 

 

Bank interest account 

 

60 

 

 

Correction of undercast 

 

10 

 

 

Dividends paid direct to bank 

 

200 

 

 

Balance carried down 

 

50 

 

 

Cheque drawn on deposit 

 

 

 

 

 

    

account written back 

 

50 

 

 

 

 

 

Cheque issued to Jones 

 

 

 

 

 

   

cancelled 

 

  25 

 

 

 

       

 

 

 

395 

 

 

 

395 

 

QUESTION 

Bank reconciliation

 

From the information given relating to PWW Co you are required to: 

(a) 

Make such additional entries in the cash at bank account of PWW Co as you consider necessary 

to show the correct balance at 31 October 20X2. 

(b) 

Prepare a statement reconciling the correct balance in the cash at bank account as shown in (a) 

above with the balance at 31 October 20X2 that is shown on the bank statement from Z Bank 

Co. 

 EXAM FOCUS POINT 

Notice that in preparing a bank reconciliation it is good practice to begin with the balance shown by 

the bank statement and end with the balance shown by the cash book. It is this corrected cash book 

balance which will appear in the statement of financial position as 'cash at bank'. However, 

examination questions sometimes ask for the reverse order: as always, read the question carefully. 

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CHAPTER 15  

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  BANK RECONCILIATIONS 

 

271 

CASH AT BANK ACCOUNT IN THE LEDGER OF PWW CO 

20X2 

 $ 

20X2 

 $ 

October 

 

 

October 

 

 

 

1 

 

Balance b/f 

    

274 

 

1 

 

Wages 

   

3,146 

 

8 

 

Q Manufacturing 

 

3,443 

 

1 

 

Petty cash 

        

55 

 

8 

 

R Cement 

 

1,146 

 

8 

 

Wages 

   

3,106 

 

11 

 

S Co 

    

638 

 

8 

 

Petty cash 

        

39 

 

11 

 

T & Sons 

    

512 

 

15 

 

Wages 

   

3,029 

 

11 

 

U & Co 

 

4,174 

 

15 

 

Petty cash 

        

78 

 

15 

 

V Co 

 

1,426 

 

22 

 

A & Sons 

      

929 

 

15 

 

W Electrical   

    

887 

 

22 

 

B Co 

      

134 

 

22 

 

X and Associates  

 

1,202 

 

22 

 

C & Company 

        

77 

 

26 

 

Y Co 

 

2,875 

 

22 

 

D & E 

      

263 

 

26 

 

Z Co 

    

982 

 

22 

 

F Co 

   

1,782 

 

29 

 

ABC Co 

 

1,003 

 

22 

 

G Associates 

      

230 

 

29 

 

DEE Corporation 

    

722 

 

22 

 

Wages 

   

3,217 

 

29 

 

GHI Co 

 

2,461 

 

22 

 

Petty cash 

        

91 

 

31 

 

Balance c/f 

      

14 

 

25 

 

H & Partners 

        

26 

 

 

 

 

26 

 

J Sons & Co  

      

868 

 

 

 

 

26 

 

K & Co 

      

107 

 

 

 

 

26 

 

L, M & N 

      

666 

 

 

 

 

28 

 

O Co 

      

112 

 

 

 

 

29 

 

Wages 

   

3,191 

 

 

 

 

29 

 

Petty cash 

        

52 

 

 

            

 

29 

 

P & Sons 

     561 

 

 

 

21,759 

 

 

 

21,759 

Z BANK CO – STATEMENT OF ACCOUNT WITH PWW CO 

 20X2 

 

Payments 

Receipts 

Balance 

 

 

October   

 

      $       

$      

 

   $    

 

 

1 

 

 

 

 

1,135 

 

 

1 

 

cheque 

 

55 

 

 

 

 

1 

 

cheque 

 

3,146 

 

 

 

 

1 

 

cheque 

 

421 

 

 

2,487 

 

O/D 

 

2 

 

cheque 

 

73 

 

 

 

 

2 

 

cheque 

 

155 

 

 

2,715 

 

O/D 

 

6 

 

cheque 

 

212 

 

 

2,927 

 

O/D 

 

8 

 

sundry credit 

 

 

4,589 

 

 

 

8 

 

cheque 

 

3,106 

 

 

 

 

8 

 

cheque 

 

39 

 

 

1,483 

 

O/D 

 

11 

 

sundry credit 

 

 

5,324 

 

3,841 

 

 

15 

 

sundry credit 

 

 

2,313 

 

 

 

15 

 

cheque 

 

78 

 

 

 

 

15 

 

cheque 

 

3,029 

 

 

3,047 

 

 

22 

 

sundry credit 

 

 

1,202 

 

 

 

22 

 

cheque 

 

3,217 

 

 

 

 

22 

 

cheque 

 

91 

 

 

941 

 

 

25 

 

cheque 

 

1,782 

 

 

 

 

25 

 

cheque 

 

134 

 

 

975 

 

O/D 

 

26 

 

cheque 

 

929 

 

 

 

 

26 

 

sundry credit 

 

 

3,857 

 

 

 

26 

 

cheque 

 

230 

 

 

1,723 

 

 

27 

 

cheque 

 

263 

 

 

 

 

27 

 

cheque  

 

77 

 

 

1,383 

 

 

29 

 

sundry credit 

 

 

4,186 

 

 

 

29 

 

cheque 

 

52 

 

 

 

 

29 

 

cheque 

 

3,191 

 

 

 

 

29 

 

cheque 

 

26 

 

 

 

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PART E: PREPARING A TRIAL BALANCE 

 

272

 

 20X2 

 

Payments 

Receipts 

Balance 

 

 

October   

 

      $       

$      

 

   $    

 

 

29 

 

dividends on 

 

 

 

 

 

   investments

 

 

 

2,728 

 

 

 

29 

 

cheque 

 

666 

 

4,362 

 

 

31 

 

bank charges 

 

936 

 

3,426 

 

ANSWER 

(a) CASH 

BOOK 

 

 

 

$        

 

 

$      

31 Oct  Dividends received 

 

2,728  31 Oct 

Unadjusted balance b/f 

 

 

 

   

   (overdraft) 

 

14 

 

 

  31 Oct 

Bank charges 

 

936 

 

 

 

           31 Oct 

Adjusted balance c/f 

 

1,778 

 

 

 

2,728   

 

 

2,728 

(b) 

BANK RECONCILIATION STATEMENT  

 

AT 31 OCTOBER 20X2 

 

 

  $      

 

  $      

 

Corrected balance as per cash book 

 

 

1,778 

 

Cheques paid out but not yet presented 

 

1,648 

 

 

Cheques paid in but not yet cleared by bank 

 

       0 

 

 

 

 

1,648 

 

Balance as per bank statement 

 

 

3,426 

Workings 

1 

Payments shown on bank statement but not in cash book* 

   $(421 + 73 + 155 + 212) 

$861 

 

* Presumably recorded in cash book before 1 October 20X2 but not yet 

presented for payment as at 30 September 20X2 

 

2 

Payments in the cash book and on the bank statement  

$(3,146 + 55 + 3,106 + 39 + 78 + 3,029 + 3,217 + 91 + 1,782 +    

   134 + 929 + 230 + 263 + 77 + 52 + 3,191 + 26 + 666) 

$20,111 

3 

Payments in the cash book but not on the bank statement = Total payments  

   in cash book $21,759 minus $20,111 = 

$1,648 

 

 

$ 

 

Alternatively: 

J & Sons 

 

868 

 

K & Co 

 

107 

 

O Co 

 

112 

 

P & Sons 

 

   561 

 

 

 

1,648 

4 

Bank charges, not in the cash book 

$936 

5 

Receipts recorded by bank statement but not in cash book:  

   dividends on investments 

$2,728 

6 

Receipts in the cash book and also bank statement  

(8 Oct $4,589; 11 Oct $5,324; 15 Oct $2,313; 22 Oct $1,202;  

26 Oct $3,857; 29 Oct $4,186) 

$21,471 

7 

Receipts recorded in cash book but not bank statement 

 

None 

 

 

One of the requirements of performance objective PO6 Record and process transactions and events, is 

to 'prepare reconciliations and other accounting controls and review those performed by others'. This 

chapter of the Interactive Text will help you fulfil this requirement. 

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CHAPTER 15  

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  BANK RECONCILIATIONS 

 

273 

 

In theory, the entries appearing on a business's bank statement should be exactly the same as those in 

the business cash book. The balance shown by the bank statement as on a particular date should be the 

same as the cash book balance at the same date.  

 

 

Differences between the cash book and the bank statement arise for three reasons. 

 

 

Errors – usually in the cash book 

 

 

Omissions – such as bank charges not posted in the cash book 

 

 

Timing differences – such as unpresented cheques 

 

When the differences between the bank statement and the cash book are identified, the cash book must 

be corrected for any errors or omissions. Any remaining difference can then be shown to be due to 

timing differences. 

 

1 

Which of the following are common reasons for differences between the cash book and the bank 

statements? 

1 Timing 

differences 

2 Errors 

3 Omissions 

4 Contra 

entries 

A 1 

and 

2 

B 1 

and 

4 

C 

2, 3 and 4 

D 

1, 2 and 3 

2 

A cash book and a bank statement will never agree.  

Is this statement true or false? 

3 

A bank statement shows a balance of $1,200 in credit. An examination of the statement shows a $500 

cheque paid in per the cash book but not yet on the bank statement and a $1,250 cheque paid out but 

not yet on the statement. In addition, the cash book shows deposit interest received of $50 but this is 

not yet on the statement. What is the balance per the cash book? 

 A 

$1,900 

overdrawn 

 B 

$500 

overdrawn 

 

C 

$1,900 in hand 

 D 

$500 

in 

hand 

4 

Comparing the cash book with the bank statement is called a ……..  ……….…..(complete the blanks). 

5 

Why is it necessary to compare the cash book and bank statement? 

 

 

 

 

 

 

 

 

 

CHAPTER ROUNDUP 

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