Table Of Contents
Top 6 Examples of Bank Reconciliation Statement
The following are the top examples of the Bank Reconciliation statement.
Example #1
ABC Corp holds an account with Citizens Bank. On December 31st, 2016, the bank closed its records for ABC Corp, having an ending balance of $180,000, while the company closed with $170,000. The company wishes to analyze the difference of $10,000 when they receive the bank’s statement next month.
Analysis
Below are the company’s income/expenses (at a broader level) for December 2016:
| Description | Amount |
|---|---|
| Opening Balance | $150,000 |
| Amount received from clients | $130,000 |
| Expenses paid for client services | ($100,000) |
| Salaries Payable accrued | ($20,000) |
| Cash to be received (accounts receivables) | $10,000 |
| Closing Balance | $170,000 |
Below is the record in Bank’s statements:
| Description | Amount |
|---|---|
| Opening Balance | $150,000 |
| Account Credits | $130,000 |
| Account Debits | ($100,000) |
| Closing Balance | $180,000 |
Hence it is determined that the provisions made for salaries to be paid and accounts receivables cannot be reflected by the bank statements as these are transactions yet to be made.
Example #2
On March 31st, 2018, Neeta paid her office rent for April 2018, amounting to $2,000. She made the payment by check, which was settled on April 2nd, 2018. When the bank statement was reconciled for March 2018, it was found that the Ending Balance in Neeta’s accounts was $2,000 short compared to that in the bank statement.
Analysis
Neeta made a payment of $2,000 for the office rent on March 31st, which was recorded in her book of accounts in the same month. However, as the payment was such that the actual settlement was made in the next month, the bank could not record that transaction. Hence it was showing a break in reconciliation.
Example #3
Jane made the following transactions in June from her savings bank account:
| Description | Amount |
|---|---|
| Opening Balance | $20,000 |
| Monthly Travel Expenses | ($2,000) |
| Personal Expenses | ($3,000) |
| Investment on Fixed Deposits | ($5,000) |
| Food Expenses | ($1,500) |
| Adhoc income from miscellaneous services | $2,000 |
| Closing Balance | $10,500 |
However, when the bank statement was received, it was found that the Closing Balance was $10,450. Jane wants to analyze the difference between her records and the bank statement.
Analysis
After careful reconciliation was made between the two statements (Jane’s and that of the bank), it was found that $50.00 was charged to Jane as a fee by the bank. Upon further investigation, Jane realized that she had ordered a checkbook and a new Debit Card for her account in June, for which the bank charged her $50.00.
Thus, bank fees can be a major factor that may cause a break between the customer’s and the bank’s books of accounts.
Example #4
John purchases a long-term note from Bank A, which pays semi-annual interest at 4% at the end of every June and December. In June, John closed his book of accounts, with Ending Balance being $35,000. However, when John received his bank statement, it reflected a closing balance of $35,500. Can you guess what can be the reason for such a difference?
Analysis
The difference is clearly due to interest accrued on the note purchased by John. As the interest paid is semi-annual, which is paid out at the end of June and December, the monthly statement for June included this accrued interest. The amount would be calculated based on the Principal on the note.
Example #5
On July 31st, 2018, Mr. Alex George closed his books of savings accounts with an ending balance of $4,500, which was estimated in his bank account. However, when he received the bank statement, to his surprise, he was charged $50.00, and his closing balance was $4,450.
Analysis
Mr. Alex approached his bank, and he was guided by the fact that his account had non-sufficient funds for July. However, after further analysis, he found out that the requirements for the minimum balance in the account had changed during this month, raising it to $5,000. Therefore, due to an insufficient balance in his account, Mr. Alex was charged $50.00.
Example #6
Jake received his bank statement, which has the following differences from his accounts:
- Interest income of $400 not recorded in Jake’s accounts
- Bank yearly maintenance charges of $100
- Surcharges on other services availed from a bank at $100
Jake’s accounts refer to an ending balance of $3,000. Prepare a reconciliation statement for Jake.
Solution
A reconciliation statement would include the below:
| Description | Amount |
|---|---|
| Closing Balance (Jake's Account) | $3,000 |
| Add: Interest Income | $400 |
| Less: Bank maintenance charges | $100 |
| Less: Other bank surcharges | $100 |
| Bank Closing Balance | $3,200 |
Conclusion
A break in the bank reconciliation statement may be positive or negative, thus affecting higher or lower ending balances in bank records. Although there may be various factors that may cause breaks between the bank’s statement and personal records, bank statements still form the basis of a lot of other analyses like valid KYC documents, calculation of credit scores, company analysis, etc. Bank statements are verified by authorized professionals while personal records may or may not be accurate, and are sometimes adulterated to show other benefits as well.
While discussing the authenticity of bank statements, it should always be kept in mind that these financial figures are a major part of the economy once they start flowing into public sectors. In addition, banks use these numbers for their reporting purposes; hence, the bank statements are considered valid documents for the customer’s financial analysis rather than a statement(s) received from non-professional and unauthorized customer sources.
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