Bank Reconciliation

Michael Edward S. Mercado De La Salle University

Company Name Bank Reconciliation Statement Month xx, xxxx

Unadjusted balance per books Add: Credit memos Sub-total Less: Debit memos Adjusted balance per books Unadjusted balance per bank Add: Deposits in transit Sub-total Less: Outstanding checks Adjusted balance per bank xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx

Definitions
Bank Reconciliation

is a statement which brings into agreement the cash

balance per book and cash balance per bank. It is usually prepared monthly because the bank provides the depositor with the bank statement at the end of the month.

Bank Statement

is a monthly report of the bank to the depositor showing the

cash balance per bank at the beginning, the deposits acknowledged, the checks paid, other charges and credits and the daily cash balance per bank during the month.

Definitions
Bank Credit Memos

refer to items not representing deposits credited by the bank

to the account of the depositor but not yet recorded by the depositor as cash receipts. They have the effect of increasing the bank balance. Typical examples of credit memos are:

a. Notes receivable by bank in favor of the depositor b. Proceeds of bank loan c. Matured time deposits transferred by the bank to the
current account of the depositor d. Interest income not yet recognized by the depositor

Definitions
Bank Debit Memos

refer to items not representing checks paid by the bank which

are charged or debited by the bank to the account of the depositor but not yet recorded by the depositor as cash disbursements. The have the effect of decreasing the bank balance. Typical examples of debit memos are:

a.NSF or No Sufficient Fund checks originally received and

deposited b.Technically defective checks c.Bank service charges recorded as interest expense d.Reduction of loan

Definitions
Deposits in Transit

are collections already recorded by the depositor as cash

receipts but not yet reflected on the bank statement. Includes:

a.Collections already forwarded to the bank for deposit but too

late to appear in the bank statement due to bank cut-off depositor.

b.Undeposited collections or those still in the hands of the

Definitions
Outstanding Checks

are checks already recorded by the depositor as cash disbursements but not yet
reflected on the bank statement. NSF or No Sufficient Fund Checks

are checks with no sufficient funds in the bank account.

Unreleased or Undelivered Checks

are checks already drawn and recorded but not yet given to the payees.
Postdated checks

are checks drawn, recorded and given to the payees but bear a date subsequent to the
end of reporting period.

Stale checks

are outstanding checks beyond six months.

Special Items
The following items are not part of reconciling items in the bank reconciliation statement but are adjusted as part of Unadjusted Balance per Books before making the bank reconciliation statement:

NSF checks issued Unreleased checks Postdated checks issued Stale checks
The uniform pro-forma entry of the above checks is: Cash xxx xxx Accounts Payable To adjust cash account due to __________

*Postdated checks received in practice must not be recorded until the date of the check.