Subtractions from Bank's Records
A reminder...
We need to use our previous bank reconciliation statement as a source of information. There are often outstanding cheques from the previous month that will be cashed early in the month. These outstanding cheques will not appear on our cash disbursements list for the current month; therefore, you may erroneously assume that there is a debit to your bank account that you have not recorded. Sometimes, these cheques may not even be cashed within the current month; therefore, as these are still not reflected in the bank's statements, you will still need to deduct this from the bank's balance for the current bank reconciliation statement.
There are four items in our records that decrease the our cash balance and are not recorded on the bank statement:
- outstanding cheque, #171 (from previous reconciliation);
- outstanding cheque, #189 (Advertising Expense - April 15);
- outstanding cheque, #193 (Advertising Expense - April 15); and
- outstanding cheque, #195 (Little Bunnies Pet Shop - April 15).
Item #1 - Cheque 171
Highlighted in yellow above is an outstanding cheque (for $106.30) from the previous month that has yet to be cashed. Even though it was on the previous bank reconciliation statement, it is still a deduction that we know about that the bank has not recorded. We must deduct this a second time from the bank's records:
Item #2 - Cheque 189
The outstanding cheque, highlighted in yellow above (for $308.63), for Advertising Expense has yet to be cashed by Windows Signs. We have issued the cheque and credited our cash account already, but because the bank knows nothing about this cheque yet, we need to deduct it from the bank balance:
Item #3 - Cheque 193
Highlighted in yellow above is an outstanding cheque (for $48.25) for Advertising Expense that has yet to be cashed by CFPL. We have issued the cheque and credited our account already, but because the bank knows nothing yet about this cheque, we need to deduct it from the bank balance:
Item #4 - Cheque 195
This is an outstanding cheque (for $201.07) issued to the Little Bunnies Pet Shop. We have issued the cheque and credited our account already, but the store has yet to cash it. Because the bank knows nothing yet about this cheque, we need to deduct it from the bank balance:
