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5.2 Bank Reconciliation

This document covers essential aspects of bank reconciliation, including understanding bank statements that report deposits, withdrawals, and final balances. It explains key concepts such as canceled checks, outstanding checks and deposits, and common discrepancies between personal records and bank statements. Additionally, it touches on service charges and the importance of reconciliation in maintaining accurate financial records. Learn how to ensure your checkbook balance aligns with your bank statement for effective financial management.

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5.2 Bank Reconciliation

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  1. 5.2 Bank Reconciliation

  2. Bank Statement • A report of deposits, withdrawals, and bank balances sent to a depositor by a bank. • Find the following: • Deposits – Beenish • Checks cashed - Morgan • Final balance - Logan • Number of checks written - Rachel • Service charges - Carly • Interest – Megan • Account number – Tessa • Number of deposits - Tim See picture on pg. 124

  3. Canceled Checks Canceled • The bank stamps checks that are deposited/cashed to indicate that the checks are canceled and are not to be transferred further.Bank knows now • They may be returned to a depositor (you) or may be kept on record by the bank.

  4. Outstanding Checks & Deposits • Out. Check = checks issued by a depositor (you) but not yet cashed by the recipient; they are not reported on a bank statement(you know…bank doesn’t) • Out. Dep. = deposits made at a bank by you but not yet shown on the bank statement

  5. Brittany vs. K-Fed. • Reconcile – • To re-establish friendship between • To settle • To bring oneself to acceptance • To make consistent or compatible “Britney Spears divorcing Kevin Federline Cites irreconcilable differences; she seeks custody of couple's two sons”

  6. Why might I not agree w/the bank? • A service charge may not have been recorded in the depositor's (your) business records • Bank took $3.00 out of your account because you used the ATM over 4 times that month • Outstanding deposits may be recorded in the depositor’s records but not on a bank statement • You deposited $ into your acct. on Friday, and it won’t post until Monday…your statement arrives in your mailbox Monday…(end of the month)

  7. More reasons… • Outstanding checks may be recorded in the depositor’s records but not on a bank statement • The checks you wrote to people have not been cashed by the time your statement is produced. • A depositor may have made math or recording errors. (Transpose) ($34.56 vs. $34.65) • Joint account confusion = lack of communication • Husband writes check for yearbook but does not record it in the register

  8. Reconciled and it feels so good! • Name that song! • When our balance in our checkbook register agrees with the bank statement balance, we have reconciled! • Do monthly when your statement arrives by mail or check online banking

  9. Service Charges • See pgs. 126/127 • Recorded as a Miscellaneous Expense • Memo is the source document • WT & OYO in Aplia

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