Treatment of unpresented cheques in bank reconciliation statement

What are unpresented cheques/checks or outstanding cheques/checks?

All those cheques/checks which have been issued or drawn by the depositor but not presented to the bank for payment, till the date, on which Bank statement is issued, are called unpresented cheques.

Effect of unpresented cheques/checks on bank balance

When a cheque/check is issued to a creditor or third party, it is immediately recorded in the bank column on the credit side of Cash Book. It reduces the bank balance in Cash Book. But the receiving party may not present the cheque to the bank for payment on the same date. The bank will only debit the depositor’s account when cheque will be presented to it and will be paid by the bank. So as long the cheque will remain unpresented, the difference between the balances of both the books will be there.


Example

suppose on 28th January 2019, balance as per Cash Book and bank statement is $10,000. On the same day, a cheque/check of $7,000 is issued to a creditor Mr. John who presented the cheque/check to Bank on 2nd of February 2019.

treatment of unpresented checques in bank reconciliation statement

treatment of unpresented checques in bank reconciliation statement example

As Mr. John did not present the cheque to the bank for payment, therefore, Cash Book is showing bank balance of $3,000 while Bank Statement is showing bank balance of $10,000. There a discrepancy of $7,000 between the balances of both thé books. Thus, when cheques are unpresented, Cash Book shows less balance and Bank Statement shows more balance.

Also Check:  unrecorded transactions treatment in bank reconciliation statement

Treatment of unpresented cheques/checks in bank reconciliation statement

It has been learned that due to unpresented cheques or outstanding checks, Cash Book shows less bank balance as compared toBank Statement. It is a temporary difference because ultimately the cheque will be presented that’s why we will not alter our Cash Book. But on the other hand it is a fact that on the date of Bank Statement the amount of the cheque issued $7,000 was there is our bank account. As bank Statement shows more balance as compare to Cash Book, so we will debit the amount of unpresented cheque while preparing Bank Reconciliation Statement to bring up the balance at the level of Bank Statement.

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