Fundamentals of

Accounting, Business
and Management 2
Quarter 2 – Module 2:
Bank Reconciliation Statement
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Published by the Department of Education Secretary:

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Undersecretary: Diosdado M. San Antonio

SENIOR HS MODULE DEVELOPMENT TEAM

Author : Andrea Marie D. Aldueza

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 Fundamentals of
Accounting, Business
and Management 2
Quarter 2 – Module 2:
Bank Reconciliation Statement
Introductory Message
For the facilitator:

Welcome to the Fundamentals of Accounting, Business and Management 2 – Grade

12 Alternative Delivery Mode (ADM) Module on the Bank Reconciliation Statement!

This module was collaboratively designed, developed, and reviewed by educators

both from public and private institutions to assist the teacher or facilitator in
helping the learners meet the standards set by the K to 12 Curriculum while
overcoming their personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration their
needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to manage
their own learning. Furthermore, you are expected to encourage and assist the
learners as they do the tasks included in the module.

For the learner:

1
Welcome to the Fundamentals of Accounting, Business and Management 2 – Grade
12 Alternative Delivery Mode (ADM) Module on the Bank Reconciliation Statement!

The hand is one of the most symbolized part of the human body. It is often used to
depict skill, action and purpose. Through our hands we may learn, create and
accomplish. Hence, the hand in this learning resource signifies that you as a
learner is capable and empowered to successfully achieve the relevant
competencies and skills at your own pace and time. Your academic success lies in
your own hands!

This module was designed to provide you with fun and meaningful opportunities for
guided and independent learning at your own pace and time. You will be enabled to
process the contents of the learning resource while being an active learner.

This module has the following parts and corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in the module.

What I Know This part includes an activity that aims to check

what you already know about the lesson to take. If you get all the
answers correct (100%), you may decide to skip this module.

What’s In This is a brief drill or review to help you link the current
lesson with the previous one.
What’s New In this portion, the new lesson will be introduced to you
in various ways such as a
story, a song, a poem, a problem opener, an
activity or a situation.

What is It This section provides a brief discussion of the lesson.

This aims to help you discover and understand new concepts and
skills.

What’s More This comprises activities for independent practice to

solidify your understanding and skills of the topic. You may check the
answers to the exercises using the Answer Key at the end of the module.

What I Have Learned This includes questions or

blank sentence/paragraph to be filled in to process
what you learned from the lesson.
What I Can Do This section provides an activity which will help you
transfer your new knowledge or skill into real life situations or
concerns.

Assessment This is a task which aims to evaluate your level of

mastery in achieving the learning competency.

Additional Activities In this portion, another activity will be given to

you to enrich your knowledge or skill of the

2
 lesson learned. This also tends retention of
learned concepts.

Answer Key This contains answers to all activities in the

module.

At the end of this module you will also find:

References This is a list of all sources used in developing

this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of
the module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your
answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning
and gain deep understanding of the relevant competencies. You can do it!

What I Need to Know

3
From the last module, we have understood the bank reconciling items. These items
are important in preparing for bank reconciliation statement.

At the end of the lessons, you should be able to:

1. Prepare bank reconciliation statement.

(ABM_FABM12-IId-13)

What I Know

Select the letter of the correct answer.

1. Beginning deposit in transit is P10,000, total deposits made per book is
P50,000 and the deposit listed in the bank is P40,000. How much is the
deposit in transit at the ending of the month?
a. P10,000
b. P20,000
c. P30,000
d. P40,000

2. Beginning outstanding checks amounted to P30,000, total checks issued per

book is P30,000 and the check paid by the bank amounted P50,000. How
much is outstanding checks at the end of the month?
a. P10,000
b. P20,000
c. P30,000
d. P40,000

3. The bank erroneously debited P10,000 check on out account. what is the
entry to correct the books?
a. DR: accounts receivable CR: cash in bank
b. DR: miscellaneous expense CR: cash in bank
c. DR: accounts receivable CR: miscellaneous expense
d. No entry

Lesson Bank Reconciliation

Statement
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 1
Bank reconciling items are important in the preparation of bank reconciliation
statement. As we have understood the bank reconciling items, we found out that
not all records on both bank and book are always updated. To do this, we need to
compute and journalize these items to reconcile the cash balances. This is
important because it reflects the correct amount of cash in the bank as that of the
book and is also important in the correct cash balance in the balance sheet. The
inconsistencies and inaccurateness of a company’s bank account records may lead
to working capital shortage and affects the overall operations of the business.

Analyze the Statement of Financial Position of ABaMagaling School Supplies. In

relation to the importance of bank reconciliation to a business, below illustrates
that cash balance is also affected by a correct bank balance. In this example,
suppose the cash of the store is composed of cash on hand and cash in bank. The
cash in bank, as we already discussed in the previous modules, must reconcile
with how we record it in the book, thus bank reconciliation statement is necessary.

ABaMagaling School Supply Store

STATEMENT OF FINANCIAL POSITION
As of June 30, 2020
CASH ON HAND

ASSETS
CASH > Physical Counting
CURRENT ASSETS
CASH ₱ 40,000
ACCOUNTS RECEIVABLE ₱ 24,000 CASH IN BANK
LESS: ALLOWANCE FOR BAD DEBTS 2,000 22,000
NOTES RECEIVABLE 17,000
ACCRUED INCOME 23,000
MERCHANDISE INVENTORY 200,000
SUPPLIES 6,000
PREPAID RENT 2,000 BANK RECORDS BOOK RECORDS
PREPAID INSURANCE 3,500
TOTAL CURRENT ASSETS ₱ 313,500

NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT
LAND ₱ 500,000
BUILDING ₱ 250,000
BANK
LESS: ACCUMULATED DEPRECIATION-BLDG 15,000 235,000 RECONCILIATION
EQUIPMENT 70,000 STATEMENT
LESS: ACCUMULATED DEPRECIATION-EQPT 14,000 56,000
FURNITURE AND FIXTURES 10,000 801,000
TOTAL ASSETS ₱ 1,114,500

LIABILITIES and OWNER'S EQUITY

CURRENT LIABILITIES
ACCOUNTS PAYABLE ₱ 50,000
ACCRUED EXPENSE 25,000
TOTAL CURRENT LIABILITIES ₱ 75,000

NON-CURRENT LIABILITIES
LOANS PAYABLE (6 YEARS) 30,000
MORTGAGE PAYABLE 800,000
TOTAL NON-CURRENT LIABILITIES 830,000
₱ 905,000
OWNER'S EQUITY
MAGALING, CAPITAL 6/30/2020 209,500
TOTAL LIABILITIES AND OWNERS EQUITY ₱ 1,114,500

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Here is the proforma of the bank reconciliation statement.

(Company Name)
Bank Reconciliation Statement
As of _______________

Balance per bank P xxx

Add: Deposit in transit P xxx
Bank error xxx P xxx

Total P xxx
Less: Outstanding checks xxx
Adjusted Bank Balance P xxx

Balance per book P xxx Add: Credit Memo xxx

Total P xxx
Less: Debit Memo P xxx
NSF Check xxx P xxx
Adjusted Book Balance P xxx

What’s In

Do you still remember the bank reconciling items? Let us recall them by filling the
blanks below.

Bank Reconciling Items

1. O T S C S

2. E T N T

3. B E R
Book Reconciling Item

6
 1. B C

2. N D

3. O K R R

How are these items important to bank reconciliation? Answer the following
questions.
1. What is a bank reconciliation?
___________________________________________________________________________
___________________________________________________________________________

2. Who should prepare bank recon and how often should it be done?
___________________________________________________________________________
___________________________________________________________________________

Notes to the Teacher

Bank reconciling is a matter of comparing books and bank
records, find the similarities and difference in amounts and
update the books.

What’s New

STEPS IN PREPARING BANK RECONCILIATION STATEMENT

7
Let us break down the steps how to prepare a bank reconciliation statement. In
order to check both bank and book records, you need to prepare the bank
statement and the book transactions for the month.

STEP 1: Get the ending cash balances for both bank and cash ledger.

Illustrative Problem:

The following are the transactions of ABM Consultancy Services. The balance in
the ledger is P39,500 while the bank has P144,600.
Look at the book and bank records below.

July 4 Deposited P9,000 in the checking account.

July 5 Issued the following checks to the suppliers: Check
No. 00101 P 6,000
Check No. 00102 P 3,000
Check No. 00103 P 9,900
July 18 Deposited P30,000 in the checking account.
July 20 Issued the following checks to the suppliers:
Check No. 00104 P15,000
Check No. 00105 P20,000 July 24
Deposited P23,000 in the checking account.

July 28 Deposited P5,400 in the checking account.

Below is the July Bank Statement of ABM Consultancy Services:

Matapat Bank
Limay, Bataan Branch

ABM Consultancy Services Account No. 00345

Duale, Limay, Bataan July 31, 2020

Date Description Withdrawals Deposits Balance

8
 30-Jun ₱ 13,000 ₱ 25,000
1-Jul 9,000 38,000
4-Jul 150,000 CM 47,000
197,000
9-Jul
13-Jul 194,500
15-Jul 30,000 182,500
212,500
₱ 2,500 DM
18-Jul 206,500
Chk No. 00100 12,000
20-Jul 186,500
21-Jul 165,500
Chk No. 00101 6,000
Chk No. 00105 155,600
23-Jul 20,000
144,600
26- 21,000 NSF
Jul 30- Chk No. 00103 9,900
Jul Chk No. 21090 11,000

Bank Statement Information

1. Debit Memo of P2,500 is a bank service charge.
2. No Sufficient Fund (NSF) check amounts P21,000.
3. The loan of the company is approved and been credited to the bank account
amounting P150,000.
4. Check No. 21090 is a bank error.

STEP 2: Compare the deposits credited and checks paid by the bank against
the deposits and checks recorded in the book. In the Illustrative example, we have
put check marks on the deposits and checks that are present in both bank and
book records.

Summary of book transaction:

Deposits Checks

July 4 P 9,000 Check No. 00101 P 6,000

July 18 30,000 00102 3,000
July 24 23,000 00103 9,900
July 28 5,400 00104 15,000

P 67,400 00105 20,000

P 53,900

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STEP 3: Compute for the deposit in transit and outstanding checks.

Deposit in Transit
Beginning deposit in transit is the deposit which is found in
the bank statement but are no longer part of the present
month’s deposit. Look for the deposit side (credit side) of

10
the bank statement, we mark x because we cannot find it in the transaction of
July. (Image: Deposits from Matapat Bank Statement)

Computation for Deposit in Transit

Deposit in transit, beginning P 13,000
Add: Deposits made per book 67,400
Total amounts that should have been deposited P 80,400
Less: Deposits shown in the bank statement 52,000 (13,000+9,000+30,000)
Deposit in transit, end P 28,400

From the deposits made in the book, it can be clearly seen that deposits which are
not yet reflected in the bank is P28,400 the same as the computed amount.

Deposits
July 4 P 9,000
July 18 30,000

July 24 23,000**
= P 28,400
July 28 5,400**

P 67,400

Outstanding Checks
Beginning outstanding checks are checks which
were in the bank statement but are no longer
part of the present month’s issued checks. Look
for the withdrawal side (debit side) of the bank
statement, we mark x because we cannot find it
in the transaction of July. (Image: Checks from
Matapat Bank Statement)

Computation for Outstanding Checks

Outstanding checks, beginning P 12,000 Add:

Checks issued per book 53,900
Total checks that should have been cleared P 65,900
Less: Checks paid by the bank 47,900 (12,000+6,000+20,000+9,900)
Outstanding checks, end P 18,000

11
From the checks issued per the book, it can be clearly seen that checks which are
not yet reflected in the bank is P18,000 the same as the computed amount.

Checks

Check No. 00101 P 6,000

00102 3,000**
00103 9,900 = P 18,000
00104 15,000**
00105 20,000
P 53,900

STEP 4: Check for bank errors as these errors will be added or subtracted to
the bank balance or book balance, depending on their effect on the balances. In
this example, it is the erroneous withdrawal of the bank to our account amounting
to P11,000, so we will add it back to the bank balance.

ABM Consultancy Services

Bank Reconciliation Statement
As of July 31, 2020

Balance per bank P 144,600

Add: Deposit in transit 28,400
Chk 21090 (bank error) 11,000 39,400

Total P 184,000
Less: Outstanding checks 18,000

Adjusted Bank Balance P 166,000

Balance per book P 39,500 Add: Credit Memo 150,000

Total P 190,500

Less: Debit Memo P 2,500

NSF Check 21,000 23,500

Adjusted Book Balance P 166,000

STEP 5: Journalize the book reconciling items to update the book.

12
 a. Credit memo (bank credits) P150,000
b. Debit Memo (bank debits) P2,500
c. NSF Check P21,000

General Journal

Date Transaction PR Debit Credit

July 31 Cash in bank 101 P 150,000

Loan Payable 202 P 150,000
To record proceeds of the loan

Miscellaneous expense 506 2,500

Cash in bank 101 2,500
To record bank service charges

Accounts Receivable 106 21,000

Cash in bank 101 21,000
To adjust bank account for NSF
check

Note: To see the effects on the General Ledger Balance after the adjustments:
Account Cash in bank 101

Date Explanation JR Debit Credit Balance

June 30 Adjusted Balance P 26,000

July 31 Book receipts CRJ P 67,400 93,400
Book payments CPJ P 53,900 39,500
Entry for bank loan GJ 150,000 189,500
Entry for DM GJ 2,500 187,000
Entry for NSF Check GJ 21,000 166,000

What is It

Can you recall the steps for bank reconciliation?

13
Enumerate the steps in preparing bank reconciliation statement.
1. ___________________________________________________________________________
___________________________________________________________________________

2. ___________________________________________________________________________
___________________________________________________________________________

3. ___________________________________________________________________________
___________________________________________________________________________

4. ___________________________________________________________________________
___________________________________________________________________________

5. ___________________________________________________________________________
___________________________________________________________________________

Things to remember:

 Who should prepare bank reconciliation?

Bigger companies usually assign persons who handles bank reconciliation and that
is the accounting department. But in a practical sense, every business who has
bank account should do bank reconciliation. It should be done on a monthly basis.

 What are the risks of not preparing bank reconciliation?

A business who do not regularly do bank reconciliation, is more prone to fraud,

theft, and bank errors. In the long run, it affects the operations, credibility, and
goodwill.

 What type of internal control is bank reconciliation?

There are three types of internal control, detective, preventative and corrective
(University of Florida - Finance and Accounting 2020). Bank reconciliation is a
detective internal control where in it finds errors or problems after the transaction
has occurred and offers fact-after-fact detection of irregularities.

What’s More

14
Activity1: Copy and compare book and bank statements. Put a CHECK (/) on the
deposits and checks found in both bank and book records of ABM CPA Review
Center.

Below are the book transactions of ABM CPA Review Center:

Cash ledger has balance of P100,000. Remember this balance as you will need
this in the preparation of the bank reconciliation statement

Deposits Checks

Mar 1 12,000 Check No. 00401 9,000

5 10,000 00402 17,000
13 5,000 00403 13,000
20 31,000 00404 8,000
28 20,000 00405 5,000

78,000 52,000

Philippine Bank
Limay, Bataan Branch

ABM CPA Review Center Account No. 00345

Duale, Limay, Bataan March 31, 2020

Date Description Withdrawals Deposits Balance

28-Feb ₱ 45,000

1-Mar ₱ 40,000
85,000
2-Mar 12,000
97,000
Check 00399 4,000
93,000
5-Mar 10,000
103,000
Check 00400 7,000
96,000
7-Mar 100,000 CM
196,000
13-Mar 5,000
201,000
15-Mar Check 00402 17,000
184,000
17-Mar 500 DM
183,500
20-Mar 31,000
214,500

15
 Check 11021 3,000
211,500
25-Mar 5,000 NSF
206,500
28-Mar 700 DM
205,800
31-Mar Check 00405 5,000
200,800

Bank statement information:

1. Bank loan is credited by the bank, P100,000.
2. NSF check was returned, P5,000.
3. The two debit memos are both bank service charges.
4. Check 11021 is a bank error.

Activity 2: From the transactions of ABM CPA Review Center, compute the
following items in good form.

Computation for Deposit in Transit

Deposit in transit, beginning P
Add: Deposits made per book

Total amounts that should have been deposited P

Less: Deposits shown in the bank statement

Deposit in transit, end P

Computation for Outstanding Checks

Outstanding checks, beginning P
Add: Checks issued per book

Total checks that should have been cleared P

Less: Checks paid by the bank

Outstanding checks, end P

Activity 3: Let us prepare bank reconciliation statement for ABM CPA Review
Center.

16
 ____________________________
Bank Reconciliation Statement
___________________________

Balance per bank P

Add: Deposit in transit P
Bank error Chk No. ______

Total P
Less: Outstanding checks
Adjusted Bank Balance
P

Balance per book P

Add: Credit Memo

Total P

Less: Debit Memos P

NSF Check

Adjusted Book Balance P

Activity 4: Journalize the book reconciling items for ABM CPA Review Center.
General Journal

Date Transaction PR Debit Credit

17
 What I Have Learned

Answer the following questions.

1. What is the importance of bank reconciliation?
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

2. What are the procedures of bank reconciliation?

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

3. What are the risks of not doing bank reconciliation?

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

4. Why is bank reconciliation considered an internal control?

___________________________________________________________________________

18
 ___________________________________________________________________________
___________________________________________________________________________

What I Can Do

Always remember the lesson about bank reconciling items. The details of the book
and the bank should arrive at a similar cash balance to say we have achieved
correct cash in bank balance. Let us simplify the idea of bank reconciliation. To put
together lessons about bank reconciliation, analyze the activity below and compute
for the correct cash balance.

Given the following information, compute the correct cash balance.

Balance per bank P22,907.50

Balance per book 21,336.00 Deposits in transit

1,814.00

Outstanding checks 3,470.50

A check for P450 was recorded in the book as P540.

A debit memo for the check book amounted to P175.

Use this table to present a simple computation of the cash balance.

BANK BOOK

P P

P P

19
Correct cash balance: _________________

Assessment
Book transactions of ABM Drive-in Cinema.
Cash ledger has balance of P 419,000.

Deposits Checks

Mar 1 120,000 Check No. 00601 90,000

5 170,000 00602 117,000
13 15,000 00603 213,000
20 131,000 00604 58,000
28 220,000 00605 95,000

656,000 573,000

Bank statement information:

1. Bank loan is credited by the bank, P1,000,000.
2. NSF check was returned, P65,000.
3. The debit memo is a bank service charge.
4. Check 01234 is a bank error.

Mayaman Bank
Limay, Bataan Branch

ABM Drive-in Cinema Account No. 00999

Duale, Limay, Bataan March 31, 2020

Date Description Withdrawals Deposits Balance

28-Feb ₱ 210,000

1-Mar ₱ 25,000 235,000

2-Mar 120,000 355,000

Check 00599 9,000 346,000

20
 Check 00600 10,000 336,000

3-Mar 120,000 456,000

5-Mar Check 00601 90,000 366,000

170,000 536,000

13-Mar 15,000 551,000

18-Mar Check 00603 213,000 338,000

23-Mar 2,000 DM 336,000

25-Mar 1,000,000 CM 1,336,000

30-Mar 65,000 NSF 1,271,000

Check 01234 100,000 1,171,000

Required:
1. Show computations for deposit in transit and outstanding checks.
2. Prepare bank reconciliation statement for ABM Drive-in Cinema.
3. Journalize book reconciling items.

Additional Activities

Activity 1. Given the following items in preparing the bank reconciliation, match
the procedure necessary for each item. (Ong and Gomendoza 2017)

Column A Column B

____1. NSF checks returned by the bank.

a. Add to cash balance per book
____2. Check collections deposited on the b. Deduct from cash balance per
last day of the month. book
c. Add to cash balance per bank
____3. Notes and interest collected by the d. Deduct from cash balance per
bank for the account holder. bank
____4. Promissory note received from a e. Is not an item for bank
customer in settlement of an account. reconciliation

____5. Bank service charges.

21
Activity 2: Bank statement of Super Mark It for the month of January showed a
balance per bank of P91,000. Cash balance per general ledger is P88,700 at the
end of the month.

Additional information:

1. Bank statement has P2,200 bank service charge.

2. Outstanding check as of January 31 amounted to P28,000.
3. NSF check is P2,680
4. Deposit of P25,600 recorded in the company’s books on does not appear on
the bank statement.
5. A credit memo of P4,780 represents a customer’s note collected by the bank.

Required: Prepare a bank reconciliation statement.

22
References
Ong, Flocer Lao, and Janelle Gomendoza. 2017. Fundamentals of Accounting,
Business and Management 2 for Senior High School. C & E Publishing, Inc.
n.d. Oxford Languages. Accessed September 20, 2020.
https://www.google.com/search?
q=reconcile&rlz=1C1SQJL_enPH910PH910
&oq=recon&aqs=chrome.1.69i57j0l7.2788j0j15&sourceid=chrome&ie=UTF-
8.
For inquiries or feedback, please write or call:

Department of Education – Region III,

Schools Division of Bataan - Curriculum Implementation Division
Learning Resources Management and Development Section (LRMDS)

Provincial Capitol Compound, Balanga City, Bataan

Telefax: (047) 237-2102

Email Address:
[email protected]