FAC1502 Bank Reconcilliation Notes

8/16/2019 FAC1502 Bank Reconcilliation Notes

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MENU LIST

• INTRODUCTION

• BANK RECON

•

GOLDEN RULES• MUST DO EXERCISE

• SELF ASSESSMENT CHECK-LIST

• INSPIRATIONAL POEM

2016-03-22 UNISA E-TUTOR: A. RAMASHAU FAC1502-S1-16 GROUP3E 2


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INTRODUCTION

Dear Honourable Members

Just a reminder the first assignment is due on the 30th March2016. Make sure you submit on time.

I have prepared notes on Bank Recon as well as selected MUST

do previous exam question papers. Go through the notes and ifyou require my assistance let me know.

Kind regards

Mr. Ramashau Aluwani

UNISA E-Tutor: FAC 1502 (Group 3E)

“I will work hard until I don’t have to introduce myself” Ramashau Aluwani

2016-03-22 UNISA E-TUTOR: A. RAMASHAU FAC1502-S1-16 GROUP3E 3


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REASONS WHY BANK STATEMENT DO NOT

AGREE WITH BANK ACCOUNT

Some of the reasons why the two balances do not agreeOutstanding cheques• These are cheques issued to suppliers during the statement period but which have

not yet been presented to the bank for payment

Outstanding deposits

• These are deposits made by the entity during the statement period but which havenot yet been credited by the bank

Direct deposits

• These are deposits made by customers directly into the bank account of the entity

Bank Charges

• These comprise of service fees, cost of cheque books, commissions, ledger fees

Interest charged on overdraft

•

This is the cost of overdrawing the bank balanceDishonoured cheques

• These are cheques received from customers but which were not paid by theirrespective banks because they do not have sufficient funds

Mistakes and omissions made by both the entity and the bank

UNISA E-TUTOR: A. RAMASHAU FAC1502-S1-16 GROUP3E 52016-03-22


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REASONS LISTED CAN CLASSIFIED AS FOLLOWS

Entries in the cash receipts and cash payments journals but whichare not in the bank statement

• Outstanding cheques• Outstanding deposits

Items in the bank statement but which are not in the cash receiptsand cash payments journals:

• Direct deposits• Bank charges

• Stop orders

• Dishonoured cheques/Unpaid cheques (R/D)

• Interest on overdraft

Items affecting both the bank statement and the cash receiptsand cash payments journals

• Mistakes made by both the entity and the bank



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PROCEDURE TO FOLLOW IN THE

RECONCILIATION PROCESS• If a bank reconciliation statement was completed for the previous

month the bank statement must first be compared with that bankreconciliation statement to ascertain whether the outstandingitems and corrections have been done by the bank.

• Compare items on the debit side of the bank reconciliationstatement with entries on the debit side of the bank statement andcredit entries on the reconciliation with credit entries on thestatement.

•

Compare the amounts in the cash receipts journal for the currentmonth with the entries on the credit side of the bank statement.

• Compare the amounts in the cash payments journal for the currentmonth with entries on the debit side of the bank statement.



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PROCEDURE TO FOLLOW IN THE

RECONCILIATION PROCESS (continued) • Adjust the cash receipts journal and the cash payments journal

with items which are in the bank statement but not in the cashreceipts and cash payments journals, for example, directdeposits, bank charges and dishonoured cheques.

• Use the totals obtained from the adjusted cash receipts and cashpayments journals to prepare the bank account.

• Prepare a bank reconciliation statement using the outstandingcheques and deposits and correct any mistakes made by both

the bank and the entity. Always start with the balance as perbank statement. The final balance on the bank reconciliationstatement should agree with the balance of the bank account.



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EXERCISE ON BANK RECON

• Exercise 8.1- Study Guide Page 172-175

The bank reconciliation statement for June 20.0

and the CRJ, CPJ, Bank account and Bank

statement of Benson Traders for July 20.0.Additional information

(a) S Swan and P Saxon are debtors of the business

(b) The deposit on 30/07/20.0 is in respect on rentreceived.



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EXERCISE 8.1



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BANK STATEMENT



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SOLUTION TO EXERCISE 8.1



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• Adjust the Cash



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GENERAL LEDGER



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BANK RECONCILIATION STATEMENT



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GOLDEN RULES• Transactions or corrections which the entity must react on, must be recorded in

the two cash journals (CRJ & CPJ) of the entity, e.g bank charges, interest, debit or

stop orders, errors in the books of the entity, stale cheques

• Transactions or corrections which the bank must react on must be recorded in the

bank reconciliation e.g deposits not yet credited, unpaid cheques and errors made

by the bank to be corrected.

• A favourable bank account balance is on the debit side of the bank account as wellas on the bank reconciliation statement

• An unfavourable or overdrawn bank account balance is on the credit side of the

bank account as well as on the bank reconciliation statement

• A favourable bank statement balance is on the credit side of the bank statement as

well as on the bank reconciliation statement.

• An unfavourable or overdrawn bank statement balance is on the debit side of the

bank statement as well as on the bank reconciliation statement.

• Remember : “YOU GO BIG OR YOU GO HOME” “BEST OR NOTHING”



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EXERCISES ON BANK RECON

PREVIOUS EXAM QUESTION PAPERS

• QUESTION 1 (OCT-NOV 2013)• QUESTION 4 (MAY-JUN 2014)

• QUESTION 1 (OCT-NOV 2014)

• QUESTION 3 (MAY-JUN 2015)

•

QUESTION 2 (OCT-NOV 2015)NB: Previous exam papers are accessible in the main-site under Official Study Material

STUDY GUIDE

• EXERCISE 8.2 (PAGE 175-177)

•

REVISION EXERCISE 1 (PAGE 180-182)• REVISION EXERCISE 2 (PAGE 183-184)

• REVISION EXERCISE 3 (PAGE 185-186)

• REVISION EXERCISE 4 (PAGE 187)



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SELF ASSESSMENT TICKBOX

THIS IS AN OPPORTUNITY TO EVALUATE YOURSELF!

NO. TOPIC STATUS TICK1 STUDY UNIT 1 - 5 DONE

2 STUDY UNIT 6 DONE

3 STUDY UNIT 7 DONE

4 STUDY UNIT 8 DONE5 STUDY UNIT 9 DONE

6 ASSIGNMENT NO. 1 DONE



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Documents

FAC1502 Bank Reconcilliation Notes