These eleven questions cover the skills in bank reconciliation: classifying items, updating the cash book, reconciling from either balance, overdrafts, correcting an error and a movement check. All businesses and figures are fictional, and every amount is in RM.
Write your answer on paper first with the starting balance labelled, then open the worked answer. Check the method as well as the final figure. The bank reconciliation walkthrough lets you test your own items, and the percentage-base explorer helps if a charge is quoted as a rate.
Questions
1. For each item, state whether the cash book needs an entry: (a) unpresented cheque RM 350; (b) bank charges RM 22; (c) uncredited lodgement RM 480; (d) standing order RM 150 on the statement only; (e) direct credit from a customer RM 900; (f) dishonoured cheque RM 200.
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(a) No. Timing item, already recorded. (b) Yes. Credit bank 22. (c) No. Timing item, already recorded. (d) Yes. Credit bank 150. (e) Yes. Debit bank 900. (f) Yes. Credit bank 200, and debit the customer’s account 200.
2. A cash book shows a debit balance of RM 2,400. The statement shows charges of RM 30, a direct debit of RM 85 and a direct credit of RM 410, none in the cash book. Find the updated balance.
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2,400 − 30 − 85 + 410 = RM 2,695. Check: out = 30 + 85 = 115, in = 410, and 2,400 − 115 + 410 = 2,695.
3. The statement balance is RM 3,150. Unpresented cheques are RM 400 and RM 250. An uncredited lodgement is RM 700. Starting from the statement, find the cash book balance.
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Unpresented total: 400 + 250 = 650. From the statement: 3,150 − 650 + 700 = RM 3,200.
4. The updated cash book shows RM 5,000. Unpresented cheques total RM 1,200 and an uncredited lodgement is RM 800. What should the statement show?
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From the cash book: 5,000 + 1,200 − 800 = RM 5,400.
5. A cash book shows an overdraft (credit balance) of RM 600. The statement shows charges of RM 40 and a dishonoured cheque of RM 150, both missing from the cash book. Unpresented cheques are RM 300 and an uncredited lodgement is RM 500. Find the updated cash book balance and the statement balance.
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Treat an overdraft as negative. Updated cash book: −600 − 40 − 150 = −RM 790 (overdraft RM 790). Statement from the cash book: −790 + 300 − 500 = −RM 990 (overdraft RM 990). Check from the statement: −990 − 300 + 500 = −790. It agrees.
6. A student says: “Cheque 118 for RM 260 appeared on the statement, so I must credit the cash book RM 260 now.” Explain the error.
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The business credited the bank column when it wrote the cheque. The statement is only the bank catching up. A second credit would reduce the balance twice. In the earlier month it was an unpresented cheque, and now it simply stops being a reconciling item.
7. The statement shows RM 7,420. Unpresented cheques are RM 1,360 and an uncredited lodgement is RM 2,100. The statement also shows bank charges RM 55, a direct debit RM 300 and a customer’s direct credit RM 1,000, none in the cash book. Find the cash book balance before updating.
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Updated cash book from the statement: 7,420 − 1,360 + 2,100 = RM 8,160. Net unrecorded: −55 − 300 + 1,000 = +645. Original balance: 8,160 − 645 = RM 7,515. Check: 7,515 − 55 − 300 + 1,000 = 8,160.
8. A customer’s cheque for RM 275 was banked and then returned unpaid. State the cash book entry and the other account.
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Credit the bank column RM 275 and debit the customer’s account RM 275. The customer owes the money again, and the bank balance falls.
9. The updated cash book is RM 4,800. The statement shows RM 5,500. The listed unpresented cheques total RM 900 and an uncredited lodgement is RM 400. The reconciliation does not agree. A check of the cheque counterfoils shows cheque 118 for RM 200 was issued on 30 October and is not yet on the statement. Find the difference and show the correction.
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First attempt: 4,800 + 900 − 400 = 5,300. The statement is 5,500, so the difference is RM 200. The missing cheque is RM 200, so unpresented cheques are 900 + 200 = 1,100. Corrected: 4,800 + 1,100 − 400 = RM 5,500. It agrees with the statement.
10. A customer’s cheque for RM 540 was recorded in the cash book as RM 450, but the statement shows RM 540. The cash book balance before correcting is RM 3,000. Find the updated balance and the other entry.
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The cash book is short by 540 − 450 = RM 90. Debit the bank column RM 90, so the balance is 3,000 + 90 = RM 3,090. The customer’s account was also credited with only 450, so credit the customer’s account RM 90.
11. At 30 September the statement showed RM 1,800 and the cash book RM 1,700, with unpresented cheques RM 250 and an uncredited lodgement RM 150, both cleared in October. In October the cash book shows receipts RM 5,300 and payments RM 4,600. The statement also shows charges RM 20 and a direct credit RM 300 not in the cash book. At 31 October unpresented cheques are RM 330 and an uncredited lodgement is RM 500. Find the expected statement receipts, payments and closing balance.
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September check: 1,700 + 250 − 150 = 1,800. Cash book before updating: 1,700 + 5,300 − 4,600 = 2,400. Updated: 2,400 − 20 + 300 = 2,680. Statement closing by reconciliation: 2,680 + 330 − 500 = RM 2,510. Expected receipts: 5,300 − 500 + 150 + 300 = RM 5,250. Expected payments: 4,600 − 330 + 250 + 20 = RM 4,540. Movement test: 1,800 + 5,250 − 4,540 = RM 2,510. Both methods agree.
If you got these wrong
- Questions 1, 2, 8 or 10 (deciding what needs an entry, or entering it): review updating the cash book before reconciling and separating unpresented payments from unrecorded charges.
- Questions 3, 4, 5 or 7 (signs, overdrafts, working back to a balance): review reconciling from either starting balance.
- Question 6 (entering a cleared cheque again): review why timing items are not duplicate entries.
- Questions 9 or 11 (a difference that will not close, or a movement check): review verifying the reconciliation with a movement check.
Note the type of slip in your mistake log and retest queue, then retry a similar question a few days later. For a teacher to follow your reasoning as you work through reconciliations, see online one-to-one Accounting tuition.