Bank Reconciliation

06/22/2012 - "Papa, mama i need to pay for my tuition". And your parent will take out a piece of rectangular paper and writes something and gives it to you. We all know what that is, since it is also the most preferred amount of payment but how can one keep track of the money if they just writes, peel it off and gives it away?  

There are two things to remember first is "Bank Reconciliation". It is a process that let's you match the balance between one's accounting record and the bank's statement (provided of course by the bank that is usually given at the end of a month). And second is a "Reconciliation statement". It is the written form where one reports the balance between the two. Then there are also two formulas to remember:

Checkbook Balance           /          Bank Statement
+ errors                              /       +  deposits in transit
----------------------              /       ---------------------------
  total                                /          total
- non-sufficient funds       /        -  outstanding checks
-----------------------           /       ---------------------------

  cash balance     <<<<  same  >>>>   cash balance

As a student, ask your parents to understand it more and as a check holder, it is important to have your reconciliation statement. And lastly, as a last reminder, one must be careful when using checks! Swindlers may be keeping an eye on you.

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sample problem: On June 23,2012, monica recieve her bank statement with a balance of P10,567. While her checkbook balance was P10,110. She found out that the bank has deducted P5.50 because of service charge and that checks 15 has not yet been encashed which amounts to 300. Her deposit of P600 at the end of the month was also late to be included in the bank statement.
 
SOLUTION

Checkbook Balance    P10,872.50        /          Bank Statement         P10,567.00
+ interest                                0.00        /       +  deposits in transit             600.00
-----------------------------------------          /    -------------------------------------------
  total                              10,872.50      /           total                              11,167.00   
- non-sufficient funds              5.50      /      -  outstanding checks           300.00
-----------------------------------------        /    --------------------------------------------
  cash balance       P10,867.00                          cash balance           P10,867.00

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checked by Prof. Cris Paner