Chapter 10
Cash Controls
303
Bank Statement
June 1–June 30, 2016
Date
Description
Withdrawal Deposit Balance
Jun 1 Opening Balance
5,000
Jun 2 Cheque #1
300
4,700
Jun 3 Cheque #2
500
4,200
Jun 8 Cheque #108
800
3,400
Jun 10 Cheque #3
700
2,700
______________
Figure 10.18
The bank reconciliation for this item is shown in Figure 10.19.
HR Clothing
Bank Reconciliation
June 30, 2016
Ledger
Bank
Balance as per records
$3,500
$2,700
Add:
Bank Error
, cheque incorrectly charged to
account June 8
800
Reconciled balance
$3,500
$3,500
______________
Figure 10.19
Since the adjustment is in the bank column, it does not need to be adjusted in the company’s books.
The amount is an error, not a timing difference, and the bank must correct the error by depositing
funds back into the company’s account. The company needs to follow up to ensure that the bank
corrects the error.
An incorrect deposit may also appear on the bank statement. In that case, the bank reconciliation
would reflect a deduction from the bank balance because it is overstated as a result of the deposit.
The company would follow up to ensure that the amount was deducted from its bank account.
Ledger Errors
It is possible for bookkeepers to make errors.These errors would appear in the company’s records.
Consider an example: upon investigating the difference between the bank statement and the ledger,
the bookkeeper discovers that a cheque recorded as $950 in the ledger should have been recorded
as $590.
The bank cashed the correct amount of the cheque ($590).The bank reconciliation for this item is
shown in Figure 10.20.
