Cash book reconciliation is very essential to know the actual available balance that can be used for business. The reconciliation should be done with the basis of the bank statements
Here are a few basic steps to reconcile the cash book:
– Compare the transactions made in the cashbook with the bank statement by checking each corresponding transaction with a check mark distinguishing the un appeared transactions in both the statements
– While calculating the adjusted bank statement, the transactions like cheque deposited but not cleared in bank should be added. The cheques that are in hand and the cheques received but not deposited to be deducted.
– Deduct any bank charges; add interest earned direct deposits from the clients and from various receivables that are in the bank, while calculating the adjusted cash book balance.
– Make appropriate journal entries for the adjustments discussed above, then only the balances will match.
– The adjusted bank statement and the adjusted cash book balances should be equal. Then the reconciliation process is successful.