A bank reconciliation is an important Internal Control over the Cash account. By comparing the records in our accounting system to the statements received from the bank, we can ensure that our records are complete and error-free.

Concept #1: Bank Reconciliation: Bank Column

Concept #2: Bank Reconciliation: Book Column

Practice: A company has a current balance in its Cash account of $3,400. The bank statement arrived showing a bank balance of $5,900. Prepare the cash reconciliation noting the following events:

• Deposits in transit total $600

• EFT receipt of dividend revenue of $900

• Bank error: the bank deducted $100 for a check written by another company.

• Service charge $20

• NSF check from a customer $50

• Book error: Company Check no. 333 was recorded for $510. The actual amount paid on account was $150.

• Outstanding checks total $2,010