I need to make a bank reconciliation statement. There's an error made by the bank-the check drawn by the corporation was charge to the owners' personal account. How am I supposed to enter that on the bank reconciliation statement?
To enter the error made by the bank on the bank reconciliation statement, you need to follow a few steps. Here's a step-by-step guide:
1. Start by gathering the necessary information:
- Obtain the bank statement from the bank.
- Collect the corporation's records, including the checkbook, cash receipts, and other relevant documents.
- Make sure to have the owners' personal account statement as well.
2. Compare the corporation's records with the bank statement:
- Match each transaction recorded by the corporation with the corresponding entry on the bank statement.
- Check for any discrepancies, such as missing deposits or withdrawn amounts, to identify any errors or omissions.
3. Identify the specific error made by the bank:
- In this case, note that the check drawn by the corporation was charged to the owners' personal account.
- Review both the bank statement and the corporation's records to confirm the error.
4. Adjust the bank statement and the corporation's records:
- On the bank statement, subtract the amount of the incorrect charge to the owners' personal account.
- On the corporation's records, increase the balance by the same amount to offset the error.
5. Record the adjustment on the bank reconciliation statement:
- On the "Bank side" of the reconciliation statement, under the "Adjustments" section, enter the amount subtracted from the bank statement.
- On the "Book side" of the reconciliation statement, under the "Adjustments" section, enter the same amount added to the corporation's records.
6. Complete the bank reconciliation statement:
- Sum up the adjusted bank balance on the "Bank side."
- Sum up the adjusted book balance on the "Book side."
- Check if the two adjusted balances match.
Remember that a bank reconciliation statement aims to reconcile the differences between the corporation's records and the bank statement. By identifying the bank error and adjusting both the bank statement and the corporation's records, you ensure that the reconciliation statement accurately reflects the correct balances.