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How to Prepare a Bank Reconciliation Part 1 - YouTube
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bank reconciliation part 1 George here
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is about to perform a bank
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reconciliation the procedure for doing
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this is as follows step 1 firstly we
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have to tick off the bank statement to
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the cash book this involves identifying
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each item recorded on the bank statement
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that also appears in the cash book this
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is done by checking the amounts and
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details on the statement and in the cash
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book where amounts and details
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correspond we tick off the items on both
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the statement and the cash book so the
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first item shown on the bank statement
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that is also in the cash book is check
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number 0 1 1 2 9 1 which is a payment
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we've made 2spooky timers so we need to
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tick off both of the entries as being
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matched we simply carry on going through
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all of the receipts and payments and
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tick off all of the ones that are shown
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in both the bank statement and the cash
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book
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you
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once we've ticked off all the items that
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we can we move on to the next step so
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for step two we now need to update the
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cash book for all the items that appear
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on the bank statement but are not shown
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in the cash book this typically includes
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items such as standing orders direct
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debits bank charges and interest we
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don't record them in the cash book until
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the bank statement arrives as we won't
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be certain about the details dates and
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amounts until we actually see them on
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the statement so we need to find all the
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items on the bank statement that we
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didn't take off for each one we need to
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write it up in the cash book the first
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item relates to a Direct Debit payment
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2sw telephone services for 220 pounds
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and 15 P so this is the first entry to
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record in the cash book once all the
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untyped items on the statement have been
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written up in the cash book the cash
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book should be complete
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we then need to balance off the cash
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book to do this we need to identify
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which side of the cash book is the
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greatest in terms of monetary value the
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receipt side in this instance indicating
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that we have money in the bank we total
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up the receipt side and the thicker we
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arrive at is immediately recorded as a
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total in both the receipts and payments
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side the items on the payment side of
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the cash book do not currently add up to
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the total we have just recorded so to
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rectify this we need to calculate a
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balancing figure so add up the amounts
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on the payment side and deduct the
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figure from the total this figure will
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become your balance carry down figure
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which in this instance is 706 pounds and
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18 P we transfer this figure to the
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receipt side of the cash book below the
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total and this brought down figure
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represents the amount we actually have
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in the bank
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ie 706 pounds and 18 P
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step three is to produce a
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reconciliation to ensure that what we
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think is in our bank account agrees with
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what the bank thinks we have in our bank
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account the only differences should be
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one outstanding checks ie money we've
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paid out but hasn't cleared yet meaning
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that these payments do not appear on the
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bank statement yet and two unrecorded
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lodgements ie money that we've paid it
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into our bank account eg from sales but
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hasn't cleared yet meaning that these
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receipts do not appear on the bank
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statement yet these are known as timing
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differences we should always look out
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for errors which are more likely to be
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in the cash book and the bank statement
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is much more likely to be accurate the
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rest of this step is shown in the next
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video clip bank reconciliation to
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