Preparation of Bank Reconciliation Statement Video Lecture - Commerce

preparation of bank reconciliation
statement so my dear how are you
managing things now father things are so
interesting now I love preparing a
reconciliation statement would you like
to see this one statement yes dear
you know father have started maintaining
a cash book to keep a record of all my
purchases now even if the balance as per
the bank statement is not similar to the
balance in my cash book I can still
determine the reasons for the same and
plan my purchases accordingly aha how
about explaining the same to your father
well father I have a debit balance in my
cash book this means I have spent less
amount on purchases this month than my
allowance the same amount is shown as a
credit balance in the bank's passbook on
the other hand if my cash book had shown
a credit balance it would mean a bank
overdraft and overdraft means that have
spent more than the amount lying in my
bank account
go on I'm impressed
for the month of April 2010 I had the
following transactions my closing
balance as per the cash book was fifty
thousand rupees I issued a cheque to my
designer for eight thousand rupees but
he has not yet deposited it in his
account this is the case of cheque
issued but not presented for payment you
had made certain investments on my
behalf on which I received an interest
of four thousand rupees it came to my
notice only yesterday after viewing the
bank statement it is a case of direct
credit in my account
I've yet to record the same in my cash
book I have not recorded bank charges of
five hundred rupees in my cash book he
had given me a cheque of ten thousand
rupees I had recorded it in my cash book
but the bank has not yet credited the
amount in my account which means that
the chick was not collected by the bank
tell me how have you reconciled the
balance father it is very simple since
the closing balance of the cash book is
known to me I will work all the
adjustments from my perspective my
designer has not yet deposited the check
this means though have reduced the
amount in the cash book the bank has
still not decreased the balance thus I
would have to add the amount in the
statement interest of four thousand
rupees is directly credited to my
account bank has added the amount to my
account but I have not posted this entry
I need to add this amount in the
statement bank charges have reduced my
balance in the passbook I have not
posted the amount in the cash book I
need to deduct the same in the statement
the check of ten thousand rupees
has not yet been credited to my account
I had already added this amount in my
cash book but there is no corresponding
entry in the passbook thus I need to
reduce ten thousand rupees in the
statement this is good but how will you
present it to me in a statement format
father look I have already prepared the
reconciliation statement balance at the
cash book fifty thousand rupees add
checks issued not presented for payment
eight thousand rupees interest received
not entered in cash book four thousand
rupees that makes it twelve thousand
rupees deduct bank charges not recorded
five hundred rupees checks deposited not
credited by bank ten thousand rupees
that makes it ten thousand five hundred
rupees
thus balanced as per bank passbook fifty
one thousand five hundred rupees as you
can see the closing balance as the cash
book was fifty thousand rupees banks
pass should show a balance of fifty one
thousand five hundred rupees at the end
of the month well let me see what you
have here mum's bank statement it has
closing balance of the passbook
mentioned in it let me go through it one
closing balance as for the passbook as
on 30th April 2010 seventy five thousand
rupees to check issued to the interior
designer was not encashed fifty thousand
rupees
three cheque received from her business
partner for an amount of twenty five
thousand rupees the same was deposited
on 25th April when has still not been
credited by the bank for a check of ten
thousand rupees which was deposited by
us was returned by the bank on 15 April
2010 and check with on charges of three
hundred and fifty rupees
levied by the bank however advice for
the scene was received on 1st May father
this is also interesting I'll prepare a
bank reconciliation statement right away
since the closing balance of the
passbook is known to me I will work all
the adjustments from the bank's
perspective check issued to the designer
50,000 rupees was not in cashed this
amount was deducted from the cash book
but bank has yet not reduced the balance
as we are preparing the reconciliation
statement from the bank's perspective
bank needs to deduct the amount an
amount of 25 thousand rupees
has been added in the cash book but
there is no corresponding entry by the
bank to reconcile bank needs to add the
amount in the statement bank charges of
350 rupees were already reduced from our
balance by the bank no corresponding
entry was made in the cash book at the
month end bank needs to add an amount of
350 rupees to match their balance with
us similarly check to Sona ten thousand
rupees was recorded only by the bank it
needs to be added to reconcile the
balances balance as per passbook 75
thousand rupees check deposited not
cleared 25 thousand rupees
check deposited but dishonoured recorded
only in the passbook ten thousand rupees
bank charge is recorded only in the
passbook three hundred and fifty rupees
that makes it 35 thousand three hundred
and fifty rupees deduct checks issued
not presented for payment fifty thousand
rupees
balance asked for cash book sixty
thousand three hundred and fifty rupees
as you can see though the closing
balance as for the bank's passbook was
seventy five thousand rupees cash book
should show a balance of sixty thousand
three hundred and fifty rupees at the
end of the month what would be the case
if there was a bank overdraft how do we
prepare the reconciliation statement
there are no special rules for the same
the reconciliation statement is prepared
in exactly the same manner only the
closing balance has to be written with a
negative sign preceding it well have I
made myself clear cent percent you have
mastered the art of preparing a bank
reconciliation statement but in case you
want to save the trouble of preparing
the same just reduce your expenses here
well that was from your perspective now
let us view the entire situation from my
perspective had I not been such a
spendthrift you would have not bothered
to call the banker to explain the
concept of bank reconciliation