In order to prepare a bank reconciliation statement on a given date, the following procedure is adopted:1)Take balance either as per cash book or as per pass book as a starting point.2)Compare the items appearing in the bank column of the cash book with the item appearing in the bank pass book.Items in the pass book are ticked off with the entries in the cash book.A list is then made of such items as are found unticked either in the cash book or in pass book.The unticked entries in the cash book or in the pass book indicate the reasons for disagreement.3)The unticked items in the cash book will represent cheques deposited in the bank but not collected and credited in the pass book or cheques issued but not presented for payment.The unticked items in the pass book will relate to the credits given, if any,for interest allowed by the bank,deposits on account of dividends, interest on investments collected by the bank, or the debits in respect of the bank charges and payments made by bank for life insurance premium etc.4)Adjust the balance which has been taken as a starting point according to the other one.If he balances as per cash book has been taken as a starting point then cash book balance as to be adjusted in accordance with the entries passed in the pass book and vise versa.For example, if the balance as per pass book is taken as the starting point, then the following are to be added:(i)Cheques issued but not yet presented for payment;(ii)Interest credited by the bank in the pass book;(iii)Dividends,interest on investments collected by the bank but not yet shown in cash book;(iv)Direct payments by customers in the bank but yet not debited in cash book.The following are to be deducted :(i)Cheques deposited for collection but yet not credited in pass book;(ii)Interest charged on overdraft;(iii)Bank charges;(iv)Amounts paid by bank for life insurance premium, rent etc. Under standing orders;(v)Cheques dishonoured but yet not recorded in cash book.The resultant figure will be the balance as shown by the pass book.If the balances as per pass book is taken as the starting point, then reverse the above procedure, i.e. , add the items to the pass book balance which have been deducted from the cash book balance and deducted the items from the pass book balance which have been added to the cash book balance.
