Analyze the two students’ discussion posts separately in the same manner as this…Let each student know what happens to the discrepancies between the book balance and the bank balance. Could these differences just be written off?Guided Response:A bank reconciliation reconciles the bank account balance per the books to the actual bank balance. Outstanding checks, deposits in transit, and bank errors are reasons there are differences between the cash reported in the accounting records and the cash balance in the bank statements.discussion_2___student_1_to_respond_to.docxdiscussion_2___student_2_to_respond_to.docxDiscussion 2 – Student 1
Bank Reconciliation
What is the purpose of the bank reconciliation?
According to our textbook the purpose of bank reconciliation is that to compare things on the bank
statement like deposits, checks, other activity, and balances with the cash amount that is within the
companies records (K Wainwright, 2012, Section 4.2). This is done so the company can see that
their records show the same as the bank after everything is added and taken out of the account at
hand.
What are the reasons for differences between the cash reported in the accounting records, and the
cash balance in the bank statements?
The differences between the cash reported in the accounting records and the cash balance in the
banks statements are that items recorded by the company but not yet within the bank are that of
deposits in transit (receipts entered within the company records but not in the bank) and also the
outstanding checks (not yet cleared checks in the bank). Also there is the items noted on the bank
statement but not recorded in the company records which is the nonsufficient funds (checks that
have previously deposited but returned because of non-payment, service charges and fees, interest
earnings on the account at hand, and also cash collections of notes and drafts) (K Wainwright, 2012,
Section 4.2). This is all important not only for the company but also the bank because if records of
both places are not balanced then it is trouble and both parties need to figure out what is going on
and how to fix it for the account.
Discussion 2 – Student 2
Bank Reconciliation
The purpose of the bank reconciliation is to compare the amounts on the bank statement to the cash
amount that is contained in the company’s records. This can identify if there is any errors or
adjustments (K Wainwright, 2012). The bank statement is a document that a bank produces to show
account activity. There can be various reasons for differences between the cash reported in the
accounting records, and the cash balance in the bank statements. Firstly, the items that are reflected
on the company’s records may not yet be recorded by the bank. This type of incident can be
deposits in transit and outstanding checks. Secondly, items that are noted on the bank statement
may not be recorded by the company. This can mean four possible incidents that include: non
sufficient (NSF) checks, bank service charges and fees, interest earnings on the bank accounts, and
cash collections of notes and drafts (K Wainwright, 2012). I think this was an interesting discussion
because it is a real life situation that I deal with monthly when I look at my bank statement. I will be
more interested in looking at it from now on.
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