HOW TO PREPARE BANK RECONCILIATION STATEMENT

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The following steps are to be followed to prepare a bank reconciliation statement:

 (a) The first step is to compare the opening balances of both the bank column of the cash book as well as bank statement; these could be different due to un-credited or un-presented cheques from a previous period.

(b) Now, compare the credit side of the bank statement with the debit side of the bank column of cash book and the debit side of the bank statement with the credit side of the bank column of the cash book. Place a tick against all the items appearing in both records.

(c) Analyze the entries both in the bank column of the cash book as well as the passbook and look for entries that have been missed to be posted in the bank column of the cash book. Make a list of such entries and make the necessary adjustments in the cash book.

(d) Correct if any mistakes or errors appear in the cash book.

(e) Calculate the corrected and revised balance of the cash book's bank column.

(f) Now, start the bank reconciliation statement with the updated cash book balance.

(g) Add the un-presented cheques (cheques which are issued by the business firm to its creditors or suppliers but not presented for payment - Expense) and deduct un-credited cheques (Cheques paid into the bank but not yet collected - Income). (h) Make all the necessary adjustments for the bank errors. In case the bank reconciliation statement begins with the debit balance as per the bank column of the cash book, add all the amounts erroneously credited by the bank and deduct all the amounts erroneously credited by the bank. Do vice-versa in case its starts with the credit balance.

(i) The resultant figure must be equal to the balance as per the bank statement.

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