21 May 2018

How to prepare Bank Reconciliation Statement ?


Preparation of Bank Reconciliation Statement is important to match the bank balance as per company book with the balance as per Pass book. This statement or report should be prepared for each month, in addition to Cash Book (Bank column), to arrive the balance shown in Pass Book (the book maintained by bank).
Steps to be followed to prepare a Bank Reconciliation Statement:
At first get ready with the statement of bank transactions maintained by you (ie: The bank column of a double/triple column cash book) and the book maintained by the bank (ie: An updated pass book)
Remember, Whatever entry is recorded on the Debit side of your Cash book, is indicates inflow of money and should be also reflected in the Credit side of the Pass book.
Likewise, Whatever entry is recorded on the Credit side of your Cash book, is indicates outflow of money and should also be reflected in the Debit side of the Pass book

Prepare a good format of Bank Reconciliation Statement like this:

BRS Format

Find all the records , recorded either in cash book only or in pass book only. Since you can’t change the balance of the pass book, (as it is maintained by bank) you have to made the necessary entries, that along with your cash book balance, will arrive as per the pass book balance in the BRS statement...
Follow this two thumb rules to make the necessary entries:
1. Debit all those transactions, which are not debited in Cash book but credited in Pass book and which are credited in Cash book but not debited in Pass book.

2. Credit all those transactions, which are not credited in Cash book but debited in Pass book and which are debited in Cash book but not credited in Pass book.

Now enter the closing "Balance as per Cash book"
Then enter the Debit and Credit "Amount not reflected in Bank"
And enter the “Balance as per Pass book".
Finally, the “Balance as per Cash book” will arrive at the “Balance as per Pass book”, when combined with the “Amount not reflected in Bank".

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