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One statement being made before computing the total amount of cash both on hand in bank is the statement of bank reconciliation. This statement is not one of the basic financial reports that every company must make annually but this statement is necessary to reach the true amount of cash. This article is not intended to discuss about Bank Reconciliation because this was discuss in a different page. This write up is consist of the lists of formulas being used in computing for adjusted cash on hand or in bank, the total amount of outstanding check and the total amount of deposits in transit.

Before going further let’s meet the three basic formats used in reconciling the book balance and the bank balance.

Adjusted balance Method
Both book and bank balance is brought to correct the cash balance that must appear in the statement of position under this method.
Book to Bank Method
This method allows the book balance to be reconciled with the bank balance. Meaning the book balance is adjusted to equal the bank balance.
Bank to Book Method
This is just similar with the book to bank method but in this method instead of the book being reconciled with the bank balance, the bank balance is being reconciled with the book or the bank balance is adjusted to equal the amount of the cash in the book balance.

Adjusted Balance Method

• Book balance
  Add: Credit memos
  ———————
  Total
  Less: debit memos
  ———————
  Adjusted book balance
  Bank balance
  Add: Deposit in transit
  ———————
  Total
  Less: Oustanding checks
  ———————
  Adjusted bank balance

Book to Bank Method

Book balance
Add: Credit memos
Outsatanding checks
———————-
Total
Less: Debit memos
Deposit in transit
———————-
Bank balance

Bank to Book Method

Bank balance
Add: Deposit in transit
Debit memos
———————–
Total
Less: Credit memos
Outstanding checks
———————–
Book balance

Two-date Bank Reconciliation
As it is so called, two-date bank reconciliation involves two dates and the procedures followed in solving for the adjusted cash balance is just the same with one-date bank reconciliation.

Computation of Book balance

Balance per book beginning of the month
Add: book debits during the month
——————————————
Total
Less: Book credits during the month
——————————————
Balance per Book end of the month

Computation of Bank balance

Balance per book beginning of the month
Add: bank credits during the month
——————————————-
Total
Less: bank debits during the month
——————————————–
Balance per Bank end of the month

Other computations involved in bank reconciliation:

Computation of deposit in transit

Deposit in transit beginning of the month
Add: Cash receipts deposited during the month
———————————————
Total deposit to be acknowledged by bank
Less: Deposits acknowledged by bank during the month
———————————————
Deposit in transit end of the month

Computation of outstanding checks

Outstanding checks beginning of the month
Add: checks drawn by depositor during the month
———————————————
Total checks to be paid by bank
Less: Checks paid by bank during the month
———————————————
Outstanding checks end of the month

The proforma computations above are all used in solving the adjusted cash in bank reconciliation.

Meet geemiz

Geezelle Maningo - A Cebu based travel blogger and the other half of GeeMiz Travel blog. She has been traveling around the Philippines and Asia since 2010 with her husband. A casual trekker/hiker since 2017 and has been blogging since 2008. A digital marketer during workdays and a bookworm on lazy days - she co-founded Cebu Book Club.

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