Simple Bank Transaction, Including Reconciliation Statements
In today’s society wherein people find it risky to carry a lot of cash with them, the use of credit cards
become popular. People use credit cards for their personal needs and use checking account for their
business transactions.
People deposit their money in the bank primarily for safekeeping and for interest earnings too.
There are two types of banks accounts, namely:
SAVINGS ACCOUNT – Money is placed in the bank by the depositor for safekeeping. He is issued a
PASSBOOK which shows the record of the money deposited and/or
Withdrawn from the bank at certain dates. The money deposited under a savings account earns interest
CURRENT OR CHECKING ACCOUNT – in a current or checking account, the checking account depositor
deposits his money and the bank provided him with booklets of blank checks called CHECKBOOKS. These
checks are the means by which a person (depositor) wiyhdraws his money as payment for bills and other
business transactions
At the end of each month, the depositor is sent a BANK STATEMENT which contains a list of the
withdrawals and deposits he has made and other service charges made by the bank together with the
checks he has issued which have been encashed at the bank. The following are some of
the terms used in simple bank transactions
DEPOSIT-IN-TRANSIT- deposit made too late to be include in the bank statement.
OUTSTANDING CHECK- check that has already been issued but not yet presented to the bank for
payment.
CANCELED CHECK- check that has already been encashed or that has already been paid by the bank.
NSF- (No Sufficient Fund) or NG (No Good) CHECK- is a check that cannot be encashed because it is
not covered by sufficient funds or the account has been closed by the depositor before encashment. NG
check is a check that is no good because it is not properly prepared , either it is not dated or nit signed.
The bank returns these checks to the depositors stating the reason why they ere returned
CHECKBOOK- a booklet containing blank checks. The checkbook shows the record of the business
transactions of the depositor with his blank.
BANK RECONCILIATION STATEMENT- is the necessary adjustment made in the bank statement to
reconcile the difference between the bank statement balance and the checkbook balance. This is
important to ascertain the actual cash balance in the depositor’s checking account.
The differences in the balances may be due to:
1. Outstanding Checks – Bank Balance
2. Deposit in Transit – Bank Balance
3. Service Charge – Checkbook Balance
4. Errors in the Checkstubs entries – Checkbook Balance
5. Cancelled Checks – Checkbook Balance
6. Example 1:
On May 2, 20__, Mr. Rey Ariel Arambulo received the bank statement showing a balance of Php
12,562.50 while his checkbook balance was Php 9,281.90. In examining the bank statement he found
out the following outstanding checks. Check No. 23, Php 2,050.60
Check no.27, Php 1,032.50, and Check no.30, Php 3,000. One amounting to Php852.00 had been
erroneously recorded as Php825.00 in his checkbook. A deposit of Php 2,650.50 made on April 30
did not reach the bank in time to be included in the bank statements. A service fee of Php 125.00 was
charged by the bank. Reconcile the balance
SOLUTION: Mr. Rey Ariel Arambulo
Reconciliation Statement
as of June 30, 20___
SOLUTION: Mr. Rey Ariel Arambulo
Reconciliation Statement
as of June 30, 20___
Checkbook balance Php 9,281.90
Less: Error
Check No. 20
Per bank Php 852
Per book 825 27.00
BALANCE Php 9,254.00
Example 2. When Mr. Erwin Garcia received his bank statement, he had a balance of Php 3,842.30. His
checkbook balance was Php 3,288.40. He found out that checks 14 and 21 were not yet cashed with
amounts of Php 1,000 and Php 557.30 respectively. His deposit of Php 500 at the end of the month was
late to be included in the bank statement. Upon inspecting his checkbook, he noted that Php 5.20 was
deducted by the bank as a service charge. An error was made when he issued a check for Php 1,002.40
which he deducted as Php1,004.20. The cancelled check of Php 500 was not deducted either from the
checkbook balance. Prepare a reconciliation statement
Solution: Erwin Garcia
Reconciliation Statement
March 30,2002
Bank balance Php 3,842.30
Add: Deposit-in- 500.00
transit
Php 4,342.30
Less: Outstanding
Checks
#14 1,000.00
#21 557.30 1,557.30
Adjusted balance Php 2,785.00
