I need help with the layout on how to prepare a bank reconciliation and record adjustments. As of July 31 Company is Clark Company.
Preparing a bank reconciliation and recording adjustments is an important accounting process that helps ensure the accuracy of financial records. To assist you with the layout and process, I will provide step-by-step instructions.
1. Gather the necessary documents: Start by collecting the bank statement for the relevant period (in this case, July 31) and any other supporting records such as check stubs, deposit slips, and bank reconciliation records from the previous month.
2. Compare bank statement to the company's records: Match the transactions on the bank statement to the transactions in the company's records. Identify any discrepancies, such as missing or additional transactions.
3. Begin the reconciliation process: Create a layout that includes the following columns:
- Date: Enter the date of the transaction.
- Description: Provide a brief description of the transaction.
- Bank Statement: Record the amount from the bank statement.
- Company's Books: Enter the amount from the company's records.
- Adjustments: Note any adjustments that need to be made.
- Adjusted Book Balance: Calculate the adjusted book balance.
4. Start the reconciliation process:
- Begin with the ending balance from the previous month's bank reconciliation as your starting point.
- Add any deposits in transit that have not been recorded on the bank statement.
- Deduct any outstanding checks that have not cleared the bank yet.
- Account for bank errors, such as duplicate transactions or incorrect amounts.
5. Record adjustments: Based on the reconciliation, if there are discrepancies between the bank statement and the company's books, record the necessary adjustments to bring them into alignment. Common adjustments include:
- Bank service charges or fees.
- Interest income or expense.
- Deposits or checks mistakenly recorded in the wrong amount or account.
- NSF (Non-Sufficient Funds) checks returned by the bank.
- Errors in recording transactions or calculations.
6. Calculate the adjusted book balance: After making all the necessary adjustments, update the "Adjusted Book Balance" column in your reconciliation layout. This should be the final reconciled balance between the bank statement and the company's records.
7. Prepare the bank reconciliation report: Summarize the adjustments made and the reconciled balance by including a brief explanation of each adjustment and the resulting impact on the balance. This report helps maintain detailed records and serves as a reference for future audits.
Remember to retain all supporting documents, such as bank statements and canceled checks, to substantiate the adjustments made during the reconciliation process.
I hope this step-by-step guide helps you in preparing a bank reconciliation and recording adjustments for Clark Company's bank accounts as of July 31.