3rd Week : Bank Reconciliation

Title : Bank Reconciliation
     Our topic during the third week was about a bank reconciliation an example of the post dated check was the situation of a a developer and a buyer of a house, in these, you have to pay in the end of the month before you start so that the developer could start building soon. You can pay that upto two years.

Every month, they will encash that and it should always be funded or  else, your check will bounce or known as the bouncing check. If you had issued a check like that; therefore, you have to open account in other banks**

When You open a new account, you will be given atleast 10 checks with stubs to be used in recording your consumptions

Here is an example of a check, you will see there the important fields needed in issuing it. So there is the Account number which is already printed on your check; but, On your first checks, your account names are not yet printed there. You will only request a personalized check only after two weeks.

In “PAY TO THE ORDER OF” You will put there he name of the depositor (the person or company whom you will pay). **

In, the peso sign, you will put there the amount that will be deposited in numerical digits, while in “PESOS” You will put there the alphabetized words of the amount with the correct spelling.

Sometimes you will see there a sign like this “//” which means it is cancelled, which means these are checks that have been paid by the bank and it is not deducted from the check of balance, it is not recorded when you issued your check.

Here are some of the terminologies we had tackled.

a) Bank Reconciliation – is the process of of bringing the bank's monthly report for each depositor showing deposits made, check written, cancelled checks, and service charges.

b) Check book - contains checks and check stubs. The checks are filled out by the depositors made, and of charges made by the bank

c) Reconciliation Statement - putting an agreement the bank statement balance and the checkbook balance.

Sometimes, a balance comes out unequal and these may be the cause of the following:

a) Outstanding checks. These are checks issued by the depositor but have not yet been presented to the bank for payment.

b) Deposits in transit.** These are deposits made but late to be included in the monthly bank statement

c) Service charges

d) Errors in the check stub entries

e) Cancelled checks

Here is an example of the problem,

1) When Mr. Erwin Garcia received his bank statement, he had a balance of 3,842.30, his checkbook balance was 3,288.40. He found out that checks #14 and #21 were not cashed with amounts of 1,000 and 577.30 pesos, respectively. His deposit of 500 at the end of the month was late to be included in the bank statement. Upon inspecting his checkbook, he noted that, 5.20 were deducted by the bank as a service charge. ** an error was made where he issued the check for 1,002.40 which he deducted as 1,004.20. The cancelled check of 500 was not deducted either from the checkbook balance.

So here is the solution,

ERWIN GARCIA

RECONCILIATION STATEMENT

MARCH 30, 2002

Checkbook balance         3,288.40                               Bank Statement Balance               3,842.30

Add: Error                                   1.80                          Add: Deposit in transit                     500.00

                                                3,290.20                                                                           4342.30                      4,342.30

Less:                                                                   Less: Outstanding Checks

Service Charge  5.20                                                     #14         1000.00

Cancelled Check 500.00             505.20                       #21            577.30                     1,557.30

                                                 2,785.00               Adjusted balance                               2785.00