ZIMSEC O Level Principles of Accounts Notes: Bank Reconciliation Statement Overdraft Example
- We have looked at the process of preparing bank statements here
- We also looked at an example here
- However we have made the distinction between a debit bank balance an an overdrawn account
- We will now look at an example of how to prepare a bank statement when the account is overdrawn
The following is the cash book (bank columns) of F Kureva for December 20X7:
| Dr | Cash Book | Cr | ||||
| Date | Details | Amount($) | Date | Details | Amount($) | |
| Dec 6 | P Paradza | 230 | Dec 1 | Balance b/d | 1900 | |
| Dec 20 | C Choto | 265 | Dec 10 | J Ranganai | 304 | |
| Dec 31 | W Banda | 325 | Dec 19 | P Moyo | 261 | |
| Dec 31 | Balance c/d | 1682 | Dec 29 | K Chatindo | 37 | |
2502 | 2502 |
The bank statement for the month is as follows:
| 20x7 | Dr($) | Cr($) | Balance($) | |
| Dec 1 | Balance | 1900 O/D | ||
| Dec 6 | Cheque | 230 | 1670 O/D | |
| Dec 13 | J Ranganai | 304 | 1974 O/D | |
| Dec 20 | Cheque | 265 | 1709 O/D | |
| Dec 22 | P Moyo | 261 | 1970 O/D | |
| Dec 30 | T Mufore: Standing Order | 94 | 2064 O/D | |
| Dec 31 | F Ramba: ZIPIT | 102 | 1962 O/D | |
| Dec 31 | Bank charges | 72 | 2034 O/D |
Required:
- Write the cash book up to date to take the necessary items into account, and
- Draw up a bank reconciliation statement as on 31 December 20X7
Solution
- Here is what the updated cash book should look like
| Dr | Cash Book (Updated) | Cr | ||||
| Date | Details | Amount($) | Date | Details | Amount($) | |
| Dec 6 | P Paradza | 230 | Dec 1 | Balance b/d | 1900 | |
| Dec 20 | C Choto | 265 | Dec 10 | J Ranganai | 304 | |
| Dec 31 | W Banda | 325 | Dec 19 | P Moyo | 261 | |
| Dec 31 | F Ramba | 102 | Dec 29 | K Chatindo | 37 | |
| Dec 31 | Balance c/d | 1746 | Dec 30 | T Mufore | 94 | |
| Dec 31 | Bank Charges | 72 | ||||
2502 | 2668 |
- Now the reconciliation statement
| Bank Reconciliation Statement as at 31 December 20X7 | $ |
| Overdraft as per Cash Book | (1746) |
| Add Unrepresented cheques: K Chatindo | 37 |
| (1709) | |
| Less uncredited lodgments: W Banda | (325) |
| Overdraft/Balance as per bank statement | (2034) |
- As you can clearly verify the obtained bank balance at the end is similar to the balance shown on the bank statement
- You can consider the two balances to be reconciled at this stage
To access more topics go to the Principles of Accounting Notes.
Quick NetOne, Telecel, Africom, And Econet Airtime Recharge
If anything goes wrong, chat with us using the chat feature at the bottom right of this screen
