How to reconcile a bank statement?

In simple terms, get your Company Bank Statement from the Bank.
Bank will produce it end of every Month.
Open your transaction report with the same bank.
now you can compare your Accounts statement with the bank statements.
If there is any difference in both the statement here you can find out.
If required you can make a statement also.
this statement called Bank Reconciliation Statement.

Bank reconcilition is to make company balance as same bank statement You make two parts:
1- outstanding entries in company - Add all transactions entered in company records and not shown in bank statement.
2- outstanding entries in bank statement - Add all transactions shown in bank statement not entered in company recodrs.
Use you balance before reconcilition - Outstanding entries in company + outstanding entries in bank statement= New balance same as bank statement

Begin with this logic equation: Bank account - outstanding paid cheques + outstanding debit transactions= company's bank account.

check out the total of all transactions in company's statement not stated in the bank statement, deduct (the missed CREDIT total) and add (the missed DEBIT total) from/to the balance mentioned on the bank statement then the NET balance will be equivalent to your company statement's balance.

N.B: make sure the period of both statement is the same.

First of all keep both cash book and bank statement side by side tick all payment made through bank with cash book. Missing figure will be appearing in the cash book as well as in bank statement comparatively.

Tick those entire figures which are not crossed from bank to cash book statement as well as cash to bank statement.

 

Starting with Cash Book

If the cash book balance is favorable/debit balance add all cheque issued but not presented and subtract all cheque deposited but not credited by bank. Add any other credit in bank and extract any other debit in bank. The remaining balance will be agreed with bank statement.

If the cash book balance is unfavorable/credit balance subtract all cheque issued but not presented and add all cheuqe deposited but not credited by bank. Add any other debit in bank and extract any other credit in bank. The remaining balance will be agreed with bank statement.     

 

Starting with Bank Statement

If the bank balance is over draft/ credit balance subtract all cheque issued but not presented and add all cheque deposited but not presented. Add any other debit in bank and extract any other credit in bank.

The remaining balance will be agreed with bank statement.

If the bank balance is overdrawn/debit balance add all cheque issued but not presented and subtract all cheque deposited but not collected or credited by bank. Add any other credit in bank and extract any other debit in bank. The remaining balance will be agreed with bank statement.

 

Particulars                                                                          

                                                                                                                .

                                                               

Particulars

When Cash book shows debit balance

& Bank shows credit balance

When Bank shows debit balance.

& cash book shows credit balance

 

CB to Bank

Bank to Cash Book

CB to Bank

Bank to CB

Cheque issued but not presented

ADD

LESS

LESS

ADD

Cheque deposited but not credited

LESS

ADD

ADD

LESS

Any credit in bank

ADD

LESS

LESS

ADD

Any debit in bank

LESS

ADD

ADD

LESS

               

Bank reconcilition is process in which the company's General Ledger (GL) is matching with Bank Statememt related to the GL.
Bank recon is done in order to check variance caused either by 1.
Outstanding payment or check 2.
Deposit in Transit (In certain cases funding entries will posted earlier in the GL whereas it credited in the bank later this suitation is called Deposit in transit ) 3.
Incorrect entry or missing entries in GL 4.Exchange rate difference and bank charges .
 

single click the account you wish to reconcile Enter the statement reference.
‘Ending balance ‘Statement date

Follow this method: Its simple as taking breath.
Balance Per Bank Statement                   Add:             Deposits in Transit         Other                                                       -   Subtract:             Checks Issued Not Cleared       Other                                                       -   Other:             Bank Error         Other                                           -                        Balance                          -                        Difference                          -               ----------------------------------------------------------------------------------------------- Balance Per General Ledger                   Add:             Wire Transfers         Credits           Bank Interest                                         -   Subtract:             Bank Charges         ACH Transactions         NSF Checks                                         -   Other:             Book Error         Other                                           -                        Balance                          -                                      

it simple terms, get your company bank statement from your bank, open your transaction report with the same bank (i.e ledger of same same bank) now we can reconciliation your Account.

Bank would be reconcilled at the end of the month or usually at the very start of the next month.

Accountant will take the ledger of the bank  also he will take statement from the bank.He will firstly mark the figures which are matched.Secondly,highlight those figures are not appreaing in the ledger like with holding tax on cash withdraw,bank charges etc etc.

Deduct the figures (WHT/bank charges) from the ledger figures ,if the resulting figure is same like bank statement closing balance figure,it means that the bank is reconcilled.

BALANCE AS PER BANK STATEMENT LESS UN CREDITED CHEQUES, ADD DEPOSITS NOT REFLECTED