9706 · 1.4.3

Bank reconciliation statements — practice questions

Practice and worked examples for 9706 Bank reconciliation statements. Short previews only — attempt the full question in MarkScheme against the official scheme.

Worked example 1

On 31 May, a business's cash book showed a bank balance of $5,280. The bank statement on the same date showed a balance of $6,145. The following discrepancies were found:

Bank charges of $55 had not been entered in the cash book.
Cheques issued to suppliers totalling $1,320 were unpresented.
A deposit of $400 made on 31 May was not yet credited by the bank.

Prepare the updated cash book extract and a bank reconciliation statement as at 31 May.

Show solution outline

Step 1 — Update the Cash Book We must record the bank charges that are on the statement but not yet in our books.

Cash Book (Bank Column)

Details	$	Details	$
Balance b/d	5,280	Bank charges	55
---	---	---	---
		Balance c/d	5,225
	5,280		5,280

The updated cash book balance is $5,225. This is the figure that would be shown in the Statement of Financial Position.

Step 2 — Prepare the Bank Reconciliation Statement We will use the format that starts with the updated cash book balance.

Bank Reconciliation Statement as at 31 May | | $|$ | :--- | ---: |

Balance as per updated cash book	5,225
Add: Unpresented cheques	1,320
	6,545
Less: Uncredited deposits	(400)
---	---
Balance as per bank statement	6,145

This matches the balance on the bank statement, so the accounts are reconciled.

Worked example 2

On 30 June, the cash book of Phoenix Ltd has a debit balance of $1,200. The bank statement for the same date shows a credit balance of $2,050. Upon investigation, you find the following:

Bank charges of $300 are on the bank statement but not in the cash book.
Interest received of $100 has been credited by the bank but not entered in the cash book.
Cheques paid to suppliers amounting to $1,500 have not yet been presented for payment.
A deposit of $450 made on 30 June does not appear on the bank statement.

You are required to: (a) Prepare the updated Bank account in the cash book. (b) Prepare a bank reconciliation statement as at 30 June.

Show solution outline

(a) Updated Cash Book (Bank Account) First, we update the cash book for items the business was unaware of.

Details	$	Details	$
Balance b/d	1,200	Bank Charges	300
---	---	---	---
Interest Received	100	Balance c/d	1,000
	1,300		1,300

The updated cash book balance is ** $1,000**.$

(b) Bank Reconciliation Statement as at 30 June Now we reconcile the updated cash book balance with the bank statement balance using the timing differences.

Method 1: Starting with Cash Book Balance | | $|$ | :--- | ---: |

Balance as per updated cash book	1,000
Add: Unpresented cheques	1,500
	2,500
Less: Uncredited deposits	(450)
---	---
Balance as per bank statement	2,050

Method 2: Starting with Bank Statement Balance (Alternative) | | $|$ | :--- | ---: |

Balance as per bank statement	2,050
Add: Uncredited deposits	450
	2,500
Less: Unpresented cheques	(1,500)
---	---
Balance as per updated cash book	1,000

Both methods prove that the balances reconcile.

Mark a 9706 question on this topic Full lesson Open in course studio