[Mikey89]

This is one of the most annoying things on the CPA exam for me. I used several reviews and am still unclear on how to perform these recs and lack the real world experience. I would greatly appreciate if anyone would be able to give me a simple guide to how to do Bank Recs.

Reg 4/18/12 78
Far 7/30/12 74, 74, 75
Bec 11/11/12 74, 78
Aud TBD 51, 71, XX

[Anonymous]

Hang with me here!

You compare the checks and deposits that have cleared the bank per the bank statement against the books. Any checks that have not cleared the bank are Outstanding Checks. Those get subtracted from the bank balance. Any deposits that are on the books but not in the bank statement are Deposits in Transit. Those get added to the bank balance. Then check the bank statement for items that aren’t on the books. The service charge is not in the book balance but it is in the bank balance. If a check cleared for the wrong amount then you adjust depending on which direction you need to go.

Bank Statement Ending Balance = $100

Book Balance = $235

Outstanding Checks = $50

Deposit in Transit = $200

Check #1 cleared for $125 but was recorded for $150. The invoice was for $125.

Service Charge = $10

Bank Balance – Outstanding Checks + Deposits in Transit +/- Errors = Adjusted Bank Balance

$100 – $50 + $200 = $250

Book Balance – Service Charge +/- Errors = Adjusted Book Balance

$235 – $10 + $25 = $250

Remember that even though you have the same balance for Bank and Book, that doesn’t mean you have actually reconciled the bank statement. You have to make sure you have accounted for everything.

Hope this helps!

[makinthemagic]

what is the balance per books?

what is the balance per bank?

the difference(s) is/are your reconciling items

Bec 4/11/11 91
Aud 7/11/11 75
Reg 8/31/11 80
Far 5/24/11 86
Ethics - 98
California Licensed CPA
Illinois Registered CPA

[Author]

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