TITLE: BANK RECONCILIATION
Have you ever handed a check or seen one at least? Have you experienced using one before? What are your experiences regarding the use of checks? Most people who has bank accounts use checks for some other reasons such as using checks for safety, especially nowadays that robbery or stealing is extremely existing. Also to avoid hassle, for example in paying with a big amount of money in cash, it takes time to count and recount the money unlike with checks that requires only a minimum of time. In this blog, you’ll know more about the use of checks, its importance and so on and so forth also the Bank Reconciliation.
What is a Bank Reconciliation? Bank Reconciliation is the process of bringing the bank's monthly report for each depositor showing deposits made, check written, cancelled checks, and service charges. Checkbook contains checks and check stubs. The checks are filled out by the depositors made, and of charges made by the bank.
Reconciliation Statement is putting an agreement the bank statement balance and the checkbook balance.
2. Deposits in Transit - These are deposits made but late to be included in the monthly bank statement. This can also be called as an error.
3. Service Charges
4. Errors in a check stub entries
5. Cancelled checks - are checks that have been paid by the bank.
What is a Check? A check is a printed form on which you write an amount of money and who it is to be paid to. Your bank then pays the money to that person from your account.When and how do we use checks? We use checks when we are to pay a big amount of money. For example, in an enrolment you are to pay the amount of Seventy – five thousand pesos. Of course you do not want to be in danger holding that kind of big amount of money in cash. What you do, is you carry your check with you, sign it with proper information and present it to the cashier. With that case, you do not have to worry about losing money bills. When you have bank account, you can have your own check provided you are 18 years old and above.
What are the most frequent check writing mistakes?
5) Written amount doesn't match the numeric amount.For instance, a person may complete a check with the written amount as one hundred dollars, but the numeric amount is only $10.00. Almost daily we return checks for this reason. In cases like this, the bank is has the option of accepting the check for only the written amount, contacting the customer to authorize a change, or returning the check.
4) Not dated or incorrect date.Some customers simply neglect to date their checks. Others supply the wrong date (post or stale dated) both intentionally and unintentionally. When post dating your check, make an effort to inform the payee of it. Checks with no date, future dates or those dated a certain number of days in the past will be returned.
3) Not signed.Surprisingly enough, many people will complete every other portion of their check and then forget to sign it. These are returned instantly.
2) Signature doesn't match the one on file.As we age, our signature changes. Other events can also alter the way a person signs documents. If the signature on a check differs noticeably from the initial sample provided it will be returned. The best way to remedy this is to furnish a more recent sample of the signature.
1) Modified or altered checks.Checks that appear to have been altered with scratch outs, write overs, different colored inks or multiple handwriting styles are considered altered. Even if the cause is a simple mistake, these changes look suspicious and may cause the check to be returned. If a mistake absolutely must be corrected, use one line to cross out the error and initial the changes. This may not guarantee that the check remains valid, but it will lower the level of suspicion. Never use whiteout on or photocopy any checking documents.To reiterate, closely examine checks and other banking documents before submitting them. Items are much more likely to be processed quickly if they have been completed correctly.
What is a checkbook? A book containing blank checks issued by a bank.
1. A folder or small book containing preprinted paper instruments issued to checking account holders and used to pay for goods or services. A checkbook contains sequentially numbered checks that account holders can use as a bill of exchange. The checks are usually preprinted with the account holder's name, address and other identifying information. In addition, each check will also include the bank's routing number, the account number and the check number.
2. A checkbook is comprised of a series of checks that can be used to make purchases, pay bills, etc. With the advent of online commerce and banking, more people are making purchases and paying bills online, thereby reducing or eliminating the need for paper checkbooks. Checkbooks include a set quantity of numbered checks, and, in addition, usually contain some type of register in which users can keep track of check details and balance account statements
1. On May 16, 2012, Mr. Marcus Gonzales received his bank statement. He has a balance of P 5, 162.00. His check book balance was P 4, 572.00. He found out that cheques 22 and 23 are not yet cashed with amounts of P 1, 600.00 and P 500.00. His deposit of P 1, 000.00 at the end of the month was late to be included in the bank statement. While checking his chequebook, he noticed that an amount of P 10.00 was deducted from his account for the service charge. P 5.75 was the amount of the error made. The cancelled check of P 1, 000.00 was not deducted either from the check book balance.
Solution:
Mr.
Marcus Gonzales
Reconciliation
Statement
May
16, 2012
Check book balance: P 4, 572.00 Bank
Statement Balance: P 5, 162.00
Add: Error P 5.75 Add: Deposit in Transit: P 1, 000.00
P 4, 577.75 P 6, 162.00
Less: Less:
Outstanding Checks:
Service Charge: P 10.00 #22 P
1, 600.00
Cancelled Check: P 1,000.00 #23 P 500.00
Adjusted Check book Balance: P 3, 567.75 Adjusted Balance: P 4, 062.00
_______________
Checked by: Prof. Crisencio Paner
