Hello everyone, let's see this example of bank reconciliation statement muscles ROM Limited is in the business of trading balance as per cash book is rupees 10 lakh 50,000 debit as on 31st March 2019 prepare a bank reconciliation statement after making necessary rectifications and also recording transactions not in the cash book and find balance as per bank statement. So, here first we have to do certain rectifications in that cash book and we are also required to record certain transactions which are the In your bank statement, but not recorded in the cash book, and using that rectified balance of the cash book, we have to prepare a bank reconciliation statement. Now, we'll be reading all this transactions one by one. And then let's see if this will appear in your rectify the cash book statement or a bank reconciliation statement. So, therefore, preparing a bank reconciliation statement will be preparing a statement showing effect of rectifications on the cash book, then using that rectified balance of the cash book will be preparing up bank reconciliation statement.

Now, let's see all those transactions one by one. And let's identify whether this will be a part of your bank reconciliation. statement or your statement of rectification of cashbook. Let's see the first transaction one check issued but not presented for the payment amounting to 30,200. Now this is check issued so it's recorded in the cash book, but since it is not present for the payment, it's not appearing in your bank statement. So, this is bank reconciliation statement this will appear in your bank reconciliation statement.

Next dyadic salary payment by bank to Mr. Nathan amounting to rupees 40,000 wrongly recorded as 35,000. In the books of account, there was some dyadic salary payment of rupees 40,000. But there was an error in that cash book and this amount of 40,000 was recorded as 35,000 In that cash book, now, this requires a rectification. So, this will be a part of your rectifications statement, next interest of rupees 200 debited by bank but not recorded in the books. So, there was a 1200 interest which was debited in your bank statement, but it is not recorded in the book. So, now we will be recording this in our cash book.

So, again this will be a part of your rectification Statement of Cash book. Next, dividend receipts of rupees 15,000 credited in the bank account but not recorded in the books again there are certain dividend receipts which are credited in the bank account, but since they are not recorded in the cash book will record them in rectifications de Mental cashbook next fifth check of rupees 50,000 deposited in the bank but not cleared. So this checks are have been deposited in the bank so they're recorded in the cash book, but they're not yet cleared. So, this will appear in your bank Khalif conciliations statement six check of rupees 12,500 received from Mrs. Manisha is wrongly entered in the books as check issued to Mrs. Manisha the same is deposited and cleared in the bank. So, there were some check of rupees 12,500 which was received from Mrs Manisha.

But in the cash book it was wrongly recorded as check issued to Malaysia. So this has to be rectified and it will be a part of your rectification statement. Now Seven fixed deposits along with the interest of rupees one lakh 52,000, measured and credited in the bank statement but not recorded in the books. So, this needs to be recorded in the book. So for cancer to be a part of your rectifications state statement. So first, we'll be preparing a statement showing the effect of rectifications in that cash book.

So, there are two types of adjustments. One is wherein there was some amount which was wrongly recorded in the cash book and we have to rectify. The second adjustment is, there are certain entries which are there in your bank statement but not in the cash flow. The same are required to be recorded in the cash book. Let's prepare the format of the statement. So this is a format of the statement statement showing effect of rectifications in the game.

Book as on 31st, March 2019, particulars among among now, balances for cash book is rupees 10 lakh 50,000 debit as on 31st March 2019. So first we'll ride this balance in this rectification statement balance as per cashbook 10 lakh 50,000. Let's see what are the transactions that are required to be included in our rectification statement. We have already marked them with artists second, Derek salary payment by bank to Mr in the den amounting to rupees 40,000 wrongly recorded as rupees 35,000 in the books of accounts. Let's prepare a working note for this. Now this is working note number one now we'll be writing it as wrong entry and Correct and so wrong entry in cash books and correct entry in the cash book, let's assume some balance let's assume the balances one lakh devid one lakh debit here.

So, now, there was some salary check of rupees 40,000 which was wrongly recorded as 35,000. So, what will be the entry for the salary check it will be salary account debit to bank account. So, on the credit side of bank account, it was recorded as 35,000 the direct entry should have been salary account debit to bank account 40,000 So, on the credit side of your cash book for the thousand so now the balance here is 65,000 here at the 60,000 now we have to rectify then we are moving from wrong entry to correct entry. So we have to reduce by thousand in the rectification statement. Let's do that in the statement showing reflective vacations less direct salary payment wrongly recorded now rectified 5000 now the next transaction third interest of rupees 1200 debited by bank but not recorded in the books of accounts. Again this will be part of a rectification statement.

So, let's prepare a walking note for this second, so again here we are writing a wrong entry in the cash book. And here we are writing us correct entry in the cash flow. Let's assume the balance as one lakh Now, here there is some interest of rupees 1200 which is not recorded in the cash book. So, assets there is no wrong entry, this entry is not recorded in the cash book. So, here there is no entry initially, now, we have to pass the entry what will be the entry for the interest interest account debit to bank account. So, on the credit side of cash book it will be 1200 so, the balance was one lakh.

Now, after passing the century the balance will be 98 800 So, we are to reduce to L hundred in our rectification statement. Let's do this. less interest debited by bank now recorded in the cash book 1200. Now, the next Four dividend receipts of rupees 15,000 creditor in the bank account but not recorded in the cash book. Again, this is not recorded in the cash book, so we have to record it. Now we'll be preparing a working note for this and the effect of this 50,000 will be shown in a rectification statement.

Third, so, this is wrong entry or an initial entry in the cash book and this is like defied entry will assume the balance as one lakh there but now, there is some dividend receipt which is not recorded in the cash book initially. So, now we have to pass this entry what will be the journal entry? bank account debit today It didn't account so on the debit side of cash boo right at us 15,000. So, now the balance was one lakh initially now, after passing the century the balance is one that would been thousand we are moving from your original cash we can do to rectify the cash book so, we had to add 15,000 in the rectifications statement, let's do that and dividend received not recorded in the cash book now recorded 15,000 Now, let's see the next transaction fifth check of rupees 50,000 deposited in the bank but not clear.

This is this will appear in the bank reconciliation statement so for time being we ignore this six check over a piece 12,500 received from miss this Manisha is wrongly entered In books as check issued to Mrs. Manisha, the same is deposited and cleared in the bank. So we have to rectify this entry in our cash book. So let's prepare a working note for this working note number four. So here we'll be writing a wrong entry and here or deserve correcting. So now let's assume the balances one lakh debate. So, jack was received from Malaysia, but initially it was recorded as check issued to Malaysia So, the entry would have been money shock on debit to bank account.

So on the credit side of cashbook alright 10,500. Now, what does the correct entry the correct entry should have been bank account debit Do money shall Count 12,500 on the debit side of cash book should be having 12,500 Now, let's see the balance here at 700 here the balances thousand 500. Now, what is the impact of this impact of this was that initially the entry was posted wrongly on the credit side of cashbook instead of debit side. So, we have to add 25,000 in the rectification statement. Let's do that ad check received wrongly entered as check issued now rectified 25,000. Now the next transaction seven fixed deposits along with the interest of rupees one lakh 52,000 measured and edited in the bank statement but not recorded in the books of accounts.

Now this will be a part of a rectification statement. Let's prepare a working note for this fifth wrong entry here, correct entry here. Now, let's assume the balance as one line. Now, there was some fd which was measured and credited by bang and the same is not recorded in the cash book. So, earlier, there was no entry in the cash pool. Now with entry for the denatured bank account debit to fixed deposit account one lakh 50 2000s on the debit side of cashbook.

We will be recording one lakh 52,000 Let's see the impact of this. Initially the balance was one lakh. Now the balances two lakh the 2000. So, the rectification statement, we have to add One lakh the 2000. So, let's record this in the rectification statement, fixed deposit not recorded in the cash book now record at one lakh 52,000. Now, this was the last transaction, we will take a total and find out what is a rectified balance as per cashbook So, 15,000 plus 25,000 plus one lakh with 2000 is one lakh 92,000 then by 1000 plus 1200 to 6200 we are to reduce, so, the balance is 12 lakh 35 800 So, now this is a rectified balances for cash flow.

Now, this balance will be used in our bank reconciliation statement. Let's prepare for bank reconciliation statement and write this rectified balances book cash. So this is a bank reconciliation statement as on 31st March 2019. So we'll write rectified balance as per cash book 12 lakh 35 800. Now, let's see the transactions which are to be included in our bank reconciliation statement. So we have transaction number one and then transaction number five which will be a part of bank reconciliation statement.

Let's see the first transaction check issued but not presented for payment amounting to rupees 30,200. So there was some checks which were issued. So they are already recorded in the cash book. So to that extent the balance in the cash book will be less now these checks are not recorded in the bank statement. Since they are not presented for the payment, so to the extent of 30,200 your balance as per bank statement will be great as compared to cash book. Now we are moving from cash book to your bank statement.

So we have to add this 30,200 in bank reconciliation statement let's prepare working not for this working nor for bank reconciliation statements of working not number one, so cash book but let's assume the balance as one life debit asper cash and one lakh credit as possible. Now there are checks that are issued on the credit side of cashbook. We have 30,200 Same are not present ID for payments So, there is no entry in the past. So, here the balances 69 800 your the balances one lakh. Now we are moving from cashbook to pass book. So we have to add 30,200 in our bank reconciliation statement let's do that add check issued but not presented for payment 30,200.

Now the next transaction transaction number five checks of rupees 50,000 deposited in the bank but not clear. Now, this is the last transaction in the bank reconciliation statement So, check of rupees 30,000 deposited in the bank so they are recorded in that cash book. So, to that extent our balance in the cash book has increased. But since same unlock recorded in the bank statement the balance in the bank statement will be less as compared to your cash book by 50,000 years since we are moving from cash book to bank statement this 50,000 needs to be read used in your bank reconciliation statement. Let's prepare working not for this working not number two cash book possible let's assume the balances one land one lakh on the credit side of passbook. Now there are checks which are deposit dead but not cleared so checks deposited on the debit side of cash book 50,000.

But since they're not clear to entry in the past books, so balance Sierra's one lakh 50,000 yeah the balance is one lakh. We are moving from cash to passbook. So we had to reduce 50,000 and bank reconciliation statement that's true that less juxtapose dead but not cleared 50,000 Now let's take a total and find out what is the balance as possible, we are to add 30,200 50,000 we are to reduce. So 12 lakh 3500 plus 3200 minus 30,012 lakh 16,000 this is balanced as possible. So, this was an example where Italy prepared a bank reconciliation statement after making necessary rectifications in that cash book and also After passing pending entries in the cash flow