A Bank Reconciliation Statement is a document that compares the Bank Balance as per Bank statement and the balance as per Bank Book maintained by us.
This statement reflects the outstanding cheques, outstanding deposits, Bank Charges etc.
This document helps us to find discrepancies between our records and the bank statement.
For example, you deposit a cheque in the bank but it doesn’t reflect in receipts of the bank statement. At the time of bank reconciliation, you can easily find out.
The time frame of Bank Reconciliation depends on many factors. These factors include the size of the organization, number of bank transactions, nature of business etc.
You can do it weekly, fortnightly or monthly. If you have too many transactions through the bank, then doing reconciliation weekly or fortnightly is the best option.
As an Accounting professional, I will suggest weekly or fortnightly. Long duration for reconciliation can be hectic and time-consuming.
I have created a Bank Reconciliation Statement along with Bank Book for simple and fast reconciliations. You can customize it according to your needs as and when required.
Let’s discuss the contents of this template in details.
This workbook consists of two files:
- Bank Book and
- Bank Reconciliation Statement
1. Bank Book
In the Bank book, you can record the transaction done through bank on daily basis. Cheque deposits, cheques issued, cash deposits, cash withdrawals etc are recorded in this file.
A screenshot of Bank Book is as follows:
The upper right corner shows the available bank balance as per our records. This balance never matches with Bank statement due to many reasons.
Discrepancies can be due to following reasons:
- Cheques of customers deposited but not credited by the bank.
- Cheques issued by us but not yet presented in the bank.
- Interest from Bank is not recorded in Bank Book.
- Bank Charges may vary and are not recorded in Bank Book.
- Other miscellaneous queries of transactions.
Once you have completed entering data into Bank Book, comes the reconciliation part. For this purpose, we prepare Bank reconciliation statement.
2. Bank Reconciliation Statement
In the reconciliation statement your Bank Book entries are compared to the Bank Statement.
It isn’t going to be so hard for you to complete this task. If you maintain your bank book regularly then this task would not take more than 15-30 minutes.
Note: Enter data in Blue colored cells only.
Open the reconciliation template and follow 5 steps mentioned below:
Step 1: You need to enter the date of issue for the bank statement in the designated cell. Then you need to enter closing bank balance as per statement along with the closing balance of Bank Book in the designated cells.
See the image below:
Step 2: Enter the outstanding cheques that have been issued but not presented in the bank.
Tip: To easily identify your outstanding cheques is to look cheque numbers in sequence on the bank statement. This way you can find the cheque numbers that have been skipped.
Normally, the non-presented cheques are those that are issued towards the end of the month. Start from the end of the statement to speed up the process.
Step 3: Enter any outstanding deposits in the designated areas. Usually, we don’t record cash deposit in our accounting system unless they have been deposited in the bank.
Step 4: Enter any other outstanding adjustments here. These adjustments include any entries that are recorded in your Bank Book but not in the Bank Statement.
Step 5: Balancing is the final step. Once you enter all of the outstanding items, the variance should be 0.
If the variance in the cell (B16) is 0 then the cell in F18 will show “BALANCED”. If there is a variance, it will show “OUT OF BALANCE”.
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