BANK RECONCILIATION

An organisations Bank Account balance

often differs from the balance shown on the
Bank Statement prepared by the bank.

Why?

UNIT 3C MY CLU 1
THINGS THE BANK MAY NOT KNOW YET
Cheques paid to creditors who may hold on to
them before taking them to the bank days later

Deposits made into the bank on or near the date

the statement is prepared ie too late to be
included

If so, they will be included in the next

statement
UNIT 3C MY CLU 2
THINGS THE ORGANISATION MAY NOT
KNOW YET

Standing orders and direct debits can be

forgotten about but the bank always
remembers them
How much Bank Charges are - until the
bank tells them in the statement
Deposits made straight through the bank
rather than to the organisation (BGCs)

UNIT 3C MY CLU 3
 THINGS TO REMEMBER
The Bank Statement and the Bank Account
are a mirror image of each other

ie payments made are recorded in the credit

column of the bank account but the bank
shows them in the debit column of the
statement
receipts are shown in the debit column of
the bank account but appear in the credit
column of the bank statement
UNIT 3C MY CLU 4
 HOW TO RECONCILE THE TWO
Step 1
Find the differences by ticking off all the
matching items in the bank statement and bank
account and circle the items for which there is
no match
Step 2
Update the bank account using the circled
items in the statement
Step 3
Prepare a bank reconciliation statement using
the circled items in the bank account
UNIT 3C MY CLU 5
 STEP 1 - Finding the Differences
BANK ACCOUNT BANK STATEMENT
Treasurer Snappy Camera Club
DATE DETAILS DEBIT CREDIT BALANCE Date Description Dr Cr Balance
01-Apr Opening Balance 2860 1Ap Op Bal 2860
06-Apr Sponsorship 250 3110
6 Deposit 250 3110
09-Apr Hire of Hotel 600 2510
18-Apr Donation 20 2530 13 004223 600 2510
26-Apr Rent 120 2410 15 DD Bet Ph 60 2450
27-Apr Subscriptions 800 3210 19 Deposit 20 2470
28-Apr Secretary Exps 305 2905 28 004256 120 2350
30-Apr Advertising 40 2865
30 Bank Chgs 10 2340
UNIT 3C MY CLU 6
 STEP 2 - Updating the Bank Account

BANK ACCOUNT

DATE DETAILS DEBIT CREDIT BALANCE

01-Apr Opening Balance 2860
06-Apr Sponsorship 250 3110
09-Apr Hire of Hotel 600 2510
18-Apr Donation 20 2530
26-Apr Rent 120 2410
27-Apr Subscriptions 800 3210
28-Apr Secretary Expenses 305 2905
30-Apr Advertising 40 2865
30 Apr DD Better Photo 60 2805
30 Apr Bank Charges 10 2795
UNIT 3C MY CLU 7
STEP 3 - The Bank Reconciliation Statement

Snappy Camera Club

BANK RECONCILIATION STATEMENT AS AT 30 APRIL.
Bank Statement Balance 2340
Add Items deposited not yet shown:
Subscriptions 800
3140
Less Unpresented Cheques:
Secretarys Expenses 305
Advertising 40 345
Corrected Bank Account Balance 2795
UNIT 3C MY CLU 8
KEY WORDS

a standing order a method of payment for a regular sum

to the same person, the same time every
month
a bank giro credit a payment directly into your bank
account

a direct debit similar to a standing order but the payee

instructs the bank to deduct the amount
from your account every month
bank charges the amount you pay the bank for setting up
standing orders and direct debits.
UNIT 3C MY CLU 9