Bank Reconciliation Meaning

It means matching transactions in Bank Statement with Balance of Bank Account as per Tally and Reporting differences if any

 

Why is BRS needed

In Companies, normally there is daily accounting of cheque given to someone or cheque received from someone.

However, it may happen that it may take some days to clear in Bank Account.

Hence Balance as per Tally may not match with Balance as per Bank Statement

Hence, Bank Reconciliation is prepared weekly or monthly to match Balances of Tally or Bank Statement and find out the differences if any.

 

Procedure for BRS

  1. Download Bank Statement for a week or month.
  2. Find Balance of Bank Account in our Books
  3. Find Differences if any between the two

These Differences are of 2 types

  • Entries in Bank Statement not in Tally
  • Entries in Tally not in Bank Statement

 

Entries in Bank Statement not in Tally

Examples of such entries are

  • Bank Charges
  • Interest Income
  • Direct Deposit by Customer in Bank Account etc

These entries should be actually passed in Tally else Profit and loss and Balance Sheet will be incorrect

(For example-If bank charges are not shown in expense side of P&L,then P&L would be inaccurate)

 

 

Entries in Tally not in Bank Statement

Examples of such entries are

  • Cheque Issued to Creditor, not yet Presented by him
  • Cheque received from Customer, not yet cleared in Bank

These are shown pending in Bank Reconciliation

(In Tally, we open Bank Account and do F5 Reconcile. It asks for Bank Date(We put dates as per Bank Statement) For those which are not appearing in Bank Statement, we leave blank

On Enter Enter or Ctrl A,it shows Bank Reconciliation)

We can take printout or Export in Excel

 

BRS ASSIGNMENT

 

BALANCE SHEET AS ON 1 April 2016

 

LIABILITES

AMT

ASSETS

AMT

SHARE CAPITAL

100000

MACHINE

50000

 

 

 

 

PROFIT AND LOSS A/c

5000

FURNITURE

110000

 

 

 

 

UNSECURED LOANS

 

SUNDRY DEBTORS

 

DK & Co 14%

200000

AK TRADERS

50000

 

 

RAVI & Co

20000

SUNDRY CREDITORS

 

ZAREEN IMPEX

15000

MTNL

3000

 

 

 STAR EXPORTS

 22000

Advance to Director  

 

CA RK JAIN

15000

Sanjeev Oberoi

20000

 

 

CASH

80000

 

345000

 

345000

 

2 April
New Current bank account opened in HSBC Bank Rs 10000 account opening cheque given by director Sanjeev Oberoi from his Savings account
4 April
Rs 75000 cash deposited
7 April
Amt withdrawn through ATM Rs 10000
10 April
Cheque recd from AK Traders Rs 40000
11 April
Cheque from AK Traders deposited in Bank

12 April

MTNL paid online through Net Banking Rs 3000
19 April
NEFT Made to STAR EXPORTS Rs 20000 in full settlement
22 April
Shopping done by director Sanjeev using company debit card,a mobile phone purchased for office worth Rs 11000 and watch for his girlfriend Rs 4000
28 April
Cheque issued to DK & Co towards repayment of loan Rs 40000
29 April
Cheque recd from Zarin Impex Rs 5000 deposited in bank same day

 

 

ENTRIES TO BE PASSED IN MAY
14 May
AK Traders deposited Rs 10000 cash in our Bank Account
18 May
Cheque received from Ravi & Co Rs 7000 deposited in bank same day
25 May
Advance tax paid by Net Banking Rs 35000
29 May
New Bank Account opened in HSBC Bank,Amt transferred from Current Account No 120202 to New Current Account no 132321 Rs 10000

 

HSBC BANK STATEMENT

FROM 1 APRIL TO 30 APRIL 2016

 

DATE

PARTICULARS

DEPOSITS

WITHDRAWAL

CLOSING BALANCE

01-Apr

Opening Balance

0

0

0

04-Apr

Account Activation-Cheque 232321

10000

 

10000

04-Apr

Cash Deposit-Karol Bagh

75000

 

85000

06-Apr

Atm Issue Charges

 

247

84753

12-Apr

Mtnl

 

3024

81729

14-Apr

Ak Traders

40000

 

121729

19-Apr

Neft Star Exports

 

20100

101629

22-Apr

Croma Electronics,Ansal Plaza

 

11022

90607

22-Apr

Timex,Ansal Plaza

 

4023

86584

30-Apr

Int Credit

126

 

86710

30-Apr

Cl Bal

 

 

86710

HSBC BANK STATEMENT

 

FROM 1 MAY TO 31 MAY 2015

DATE

PARTICULARS

DEPOSITS

WITHDRAWAL

CLOSING

BALANCE

01-May

Opening Balance

0

0

86710

02-May

Cheque 232121 Dk & Co

 

40000

46710

03-May

Cheque 323112 Zarin Impex

5000

 

51710

14-May

Cash Deposit-Lucknow

7000

 

58710

15-May

Outstation Cash Deposit Charges

 

200

58510

20-May

Cheque 632321 Ravi & Co

7000

 

65510

20-May

Cheque 632321 Ravi & Co

 

7000

58510

20-May

Cheque Dishonour Charges

 

372

58138

25-May

Cash Deposit-Model Town

2000

 

60138

25-May

Income Tax Dept

 

35030

25108

31-May

Minimum Balance Charges

 

750

24358

31-May

Closing Bal

 

 

24358

  1. Tally

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .