Question

What transactions might get recorded as a result of a bank reconciliation

Answer 1

The items on the bank reconciliation which require journal entries are the items that appeared in the bank statement but did not appear on the books of accounts.So to match the balance of cash as per bank statement with the balance as per the books of accounts we need to pass adjusting entries in the books of account.

Few common examples are as follows:

a) Bank service charges: Bank service charge is often shown in the last day of the bank statement. Since they are shown in the bank statement and not shown in the books of accounts we need to pass the following entries:

                                      Bank Service Charge A/c(Dr)              xxxx

                                       To Cash A/c(Cr)                                            xxxx

b) Collection made by the bank of companies notes receivable: The amount appears in the bank statement and not in the books of accounts. Hence the following adjustment entry is passed

                                     Cash A/c(Dr)              xxxx

                                    To Notes Receivable(Cr)     xxxx

c) other examples where amount appears in bank statement and not in the books are check printing charges, fees for returned checks,interest earned on bank account,company errors, Misc bank charges,any other automatic withdrawal from the banks,etc