So, after caring the importance of company's bank reconciliation statement, company will not ignore it. Company will manage the system of making its bank reconciliation statement. If you are the employee of any company who will be responsible for preparing bank responsible statements, you should learn everything about this. We recommend to our past written resources on BRS.
First, you should learn :
How to Prepare a Company's Bank Reconciliation?
Second, you should learn:
How to Make a Company's Automatic Bank Reconciliation in Tally.ERP 9?
Second, you should learn :
How can You Control on Cash with Bank Reconciliation?
Now, one of important part of your learning company's bank reconciliation through practical sample example. It will help you to understand this practical.
So, your help we are giving a sample company bank reconciliation example.
In this example, we take HINDUSTAN PETROLEUM CORPORATION LIMITED's Bank Reconciliation.
Bank Reconciliation Process of HPCL Fundamentals:
HPCL has done the bank reconciliation process in two steps.
Step 1.
First Way |
Balance per Bank Statement on Aug. 31, 2013
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Adjustments:
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Add: Deposits in transit
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Deduct: Outstanding checks
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Add or Deduct: Bank errors
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Adjusted/Corrected Balance per Bank
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Step 2.
2nd Step
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Balance per Books on Aug. 31, 2013
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Adjustments:
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Deduct: Bank service charges
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Deduct: NSF checks & fees
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Deduct: Check printing charges
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Add: Interest earned
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Add: Notes Receivable collected by bank
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Add or Deduct: Errors in company's Cash account
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Adjusted/Corrected Balance per Books
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1. Bank service charges
Time to time bank automatically debit our account for debit service charges. These services may be collection or clear the check or ATM charges. So, correct balance will be decreased but our cash book balance will show more, so we will deduct this balance from our cash book balance.
2. NSF Check and Fees
NSF checks are those which company sends to bank for collection and pass the entry of receipt of cash but when party from where HPCL wants to get money have not sufficient amount, this check will be not sufficient balance. It is the dishonored of company's check. So company's bank will not credit money to HPCL. If credited, it will debit for rejecting this credit. So, HPCL will deduct this NSF Check amount and bank fees.
3. Check printing charges
Sometime bank may deduct the amount of check printing without notice. So, it should be deducted from company's cash book.
4. Interest earned
Any earning from interest will be automatically credit. So, company's cash book will add this amount in his balance.
5. Notes Receivable
When company's bank account gets notes receivable and its interest, bank balance will increase but there is no information to company. When company gets its information from bank statement, it will increase its cash book balance.
are assets of a company. When notes come due, the company might ask its bank to collect the notes receivable. For this service the bank will charge a fee. The bank will increase the company's checking account for the amount it collected (principal and interest) and will decrease the account by the collection fee it charges.Since these amounts are already on the bank statement, the company must be certain that the amounts appear on the company's books in its Cash account.
Step 3
Above is the fundmental of Bank reconciliation of HPCL. Now, we are discussing more practical of this process. HPCL is using Oracle's JD Edwards EntrpriseOne ERP system. It has two bank account one is non-operating bank account and other is operating bank account. Both follow same steps.
Following are its steps for bank reconciliation through ERP System
1. Bank Statement Entry/ Upload
- When bank emails the bank statement in PDF file or excel file, company will upload it in its ERP system which will covert it in system's format and it can be seen after uploading. Following is its screenshot.
2. Reviewing JDE Bank Statement
- Bank Statement Header
Beginning Balance
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Enter the opening balance as per Bank Statement
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Ending Balance
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Enter the closing balance as per Bank Statement
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Total Withdrawal
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The system updates this total after entry of each transaction with a negative amount in the detailed part of the form.
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Total Deposit
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The system updates this total after entry of each transaction with a positive amount in the detailed part of the form.
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Remaining Amount
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After you enter the first transaction, the system displays a remaining amount. The remaining amount changes as you enter each subsequent transaction. When the remaining amount is zero, the statement is in balance.
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- Bank Statement Detail
Sr. No.
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Field
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NOC Accounts
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Main Bank
Accounts
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Operating Accounts
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Description
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1
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Transaction Code
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BDS
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BDS / CK / JE / OTH / TT
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BDS / CK / JE / OTH / TT
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Hard Coded
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2
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Amount
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Required
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Required
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Required
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Amount deposited/withdrawn
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3
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Value Date
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Required
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Required
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Required
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Original Date – Value Date (Date on which the bank debits/credits the bank account.
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4
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GL Date
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Required
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Required
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Required
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Date on which the transaction is booked
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5
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Reference
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BDS Number
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HPCL Location Code
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Cheque Number for BDS / CK, 0 for others
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6
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Doc. Type
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Required
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Required
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Required
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- Transaction Code Glossary:
Transaction
Code
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Description/ usage
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Document Type
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JE
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You can write a journal entry to record an adjustment made by the bank, such as a service charge or a Telegraphic Transfer (TT) fee. When you reconcile bank statements, the system updates the Account Ledger table with a journal entry between the bank account and the G/L account that you specify in the Account Number field in the Details option of the exit bar. During Reconciliation, the system marks transactions with this code as reconciled.
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JB
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BDS
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This transaction code is used in case of BDS credits and TT entries, which have to be reconciled for Value Date, Amount and document reference. Please note that this code indicates to the system that for reference, the matching has to be done from Bank Statement Reference (Payment/ Rcpt No field) to Reference 2 field of the General Ledger Reconciliation Work Table file.
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JG
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OTH
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This transaction code is used for all other transactions including Payment and Journal Entries and the matching is done based on Document Reference Number (Payment/ Rcpt No field) to Reference 1 of the General Ledger Reconciliation Work Table file.
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JB
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TT
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This transaction code is used to create Transfer entries (in/out) to other bank accounts. There is no need to give the other account number in the Detail exit bar, as this account number is hard coded in the Bank Account information set-up. During Reconciliation, the system marks transactions with this code as reconciled.
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JB
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3. Auto Reconcile Void Receipts and Payments:
4. Refresh Reconciliation File
- Bank Balance = the amount on your bank statement.
- Outstanding Debits and Credits = the records in the F0911 table that have not been marked as reconciled.
- Book Balance = the account balance in the F0902 table. The system includes balance forward amounts for balance sheet accounts.
Iteration
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Transaction Code
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Main/Local Bank
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Consolidation
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0
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1
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2
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3
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4
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5
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BDS
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Main
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Off
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NA
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Y
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Y
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Y
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Y
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N
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BDS
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Local (NOC)
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On
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NA
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N
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N
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N
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N
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Y
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BDS
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Local (NOC)
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Off
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NA
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Y
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Y
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Y
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Y
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Y
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OTH / CK
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Local (Optg)
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On
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Y
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N
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N
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N
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N
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N
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OTH / CK
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Local (Optg)
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Off
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Y
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N
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N
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N
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N
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N
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- 0 = Check No + Amount
- 1 = Value Date + Amount
- 2 = Doc No + Date + Amount
- 3 = Doc No + Date (+/- 5 days) + Amount
- 4 = Doc No + Date + Amount (+/- Tolerance)
- 5 = Doc No + Amount
BANK RECONCILIATION PROOF SHEET - MAY-2013
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SBI JNPT Dronagiri - NOC Account [Vashi RRO]
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BANK A/C NO. 11000.237100.1156101 (Short ID: 05499327)
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BALANCE AS PER GL
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0.00
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LESS : DRGL
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0.00
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LESS : DRBS
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0.00
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0.00
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ADD : CRGL
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0.00
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ADD : CRBS
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0.00
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0.00
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TOTAL
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0.00
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BALANCE AS PER B/S
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0.00
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DIFFERENCE
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0.00
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A] DRGL
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DATE
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BDS/CHQ/REF NO.
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AMOUNT
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REMARKS
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TOTAL DRGL
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0.00
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B] DRBS
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DATE
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BDS/CHQ/REF NO.
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AMOUNT
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REMARKS
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TOTAL DRBS
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0.00
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C] CRGL
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DATE
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BDS/CHQ/REF NO.
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AMOUNT
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REMARKS
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TOTAL CRGL
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0.00
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D] CRBS
| |||
DATE
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BDS/CHQ/REF NO.
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AMOUNT
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REMARKS
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TOTAL CRBS
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0.00
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6. Reconcile self-balancing items (Bank Statement side):
After the Bank Reconciliation is run in final mode for the various iterations required, run the self-balancing programs to eliminate self-balancing items. For example, wrong entries reversed by bank in the bank statement, rectification entries passed in the General Ledger. The report will list amounts with records with the same amounts but opposite signs having the same Reference number.
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