How to draw up a bank reconciliation statement when error occurred in the double entry?

Many pupils may encounter problem in solving the question when the question indicated that an error occured in the posting of the cheque figure in the cash at bank.  In this blog, I will show you how SIMPLE it is to solve this problem

Quesion

The cash at bank account of Big Ben Enterprise is shown as follows: Cash at Bank Account Date Particulars Cheque Number Debit Credit Balance 2019 $ $ $ Sep-01 Balance b/d 3 400 Dr 3 Ong Supplies 122 2 230 1 170 Dr 5 Lim Trading 5 000 6 170 Dr 14 Inventory 123 5 460 710 Dr 20 Rent 124 200 510 Dr 25 Jimmy Trading 2 300 2 810 Dr 28 Sales Revenue 22 000 24 810 Dr Oct-01 Balance b/d 24 810 Dr The following bank statement was sent to Big Ben Enterprise on 2 October 2019. Bank Statement Date Particulars Withdrawal Deposit Balance 2019 $ $ $ Sep-01 Balance b/d 3 500 Cr 2 Deposit 100 3 600 Cr 2 Cheque No. 121 200 3 400 Cr 7 Cheque No. 122 2 230 1 170 Cr 18 Cheque No. 124 230  940 Cr 19 Bank Charges 30 910 Cr 25 Insurance 800 110 Cr 26 Deposit 2 300 2 410 Cr 28 Deposit 22 000 24 410 Cr 29 Interest Income 50 24 460 Cr Additional Information: The business had recorded cheque number 124 incorrectly in the cash book. REQUIRED:

(a)    Prepare the adjusted cash at bank account for the month of  September 2019 (b)   Prepare the bank reconciliation statement as at 30 September 2019.

To answer this question, you follow the step again.

Step 1 : tick/cancel (√) all the items that appear in both cash at bank and bank statement

              

Step 2 : check the beginning balance, if it is not the same, check why and which

              transactions needed to be ticked as it should be done last month, shown by 

              a double ticks below (√√)

Step 3 : highlight all the transactions to appear in the updated cash at bank and bank 

             reconciliation statement

After you have done step 1 to 3 ,you should get the one below :  

The cash at bank account of Big Ben Enterprise is shown as follows: Cash at Bank Account Date Particulars Cheque Number Debit Credit Balance 2019 $ $ $ Sep-01 Balance b/d 3 400 Dr 3 Ong Supplies 122 2 230√ 1 170 Dr 5 Lim Trading 5 000 6 170 Dr 14 Inventory 123 5 460 710 Dr 20 Rent 124 200 510 Dr 25 Jimmy Trading 2 300√ 2 810 Dr 28 Sales Revenue 22 000√ 24 810 Dr Oct-01 Balance b/d 24 810 Dr The following bank statement was sent to Big Ben Enterprise on 2 October 2019. Bank Statement Date Particulars Withdrawal Deposit Balance 2019 $ $ $ Sep-01 Balance b/d 3 500 Cr 2 Deposit 100√√ 3 600 Cr 2 Cheque No. 121 200√√ 3 400 Cr 7 Cheque No. 122 2 230√ 1 170 Cr 18 Cheque No. 124 230  940 Cr 19 Bank Charges 30 910 Cr 25 Insurance 800 110 Cr 26 Deposit 2 300√ 2 410 Cr 28 Deposit 22 000√ 24 410 Cr 29 Interest Income 50 24 460 Cr Now, lets get back to the error of cheque number 124.   The additional information stated that the bank statement amount of $230 is correct but the cash at bank figure entered wrongly as $200. So, we will need to make the adjustment for this transaction only when we updating the cash at bank.  Since this amount is an withdrawal of $230 but entered wrongly at $200 in the credit side  of the cash at bank, we will need to CR the Cash At Bank again with $30 (230-200).

The final answer will look like this:

Updated Cash at bank
Date	Particulars	Debit	Credit	Balance
2019		$	$	$
Sep 30	Balance b/d			24810Dr
30	Rent (error)		30	24780 Dr
30	Bank charges		30	24750 Dr
30	Insurance		800	23950 Dr
	Interest income	50		24000 Dr
Sept 1	Balance b/d			24000 Dr

(b)                            

Bank Reconciliation Statement as at 30 September 2019
	$	$
Credit balance as per bank statement		24460
Add Deposit in transit
Lim Trading		5000
Less: cheques not yet presented
Inventory		(5460)
Debit balance as per cash at bank account		24000

For more practice questions on bank reconciliation with error occurred , please click here 
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