Class: Senior Secondary School 2 (SS2 / SSS 2)
Term: 1st Term
Week: 9
Age: 16 years
Duration: 45 minutes
Subject: Financial Accounting
Curriculum Theme: Accounting Principles
Previous Lesson: Bank Reconciliation: Bank Statement Differences and Discrepancies
Topic: BANK RECONCILIATION STATEMENT
Subject Matter: Preparation of adjusted cash book, preparation of bank reconciliation statement, treatment of bank overdraft, and reconciliation using a normal bank statement.

Specific Objectives

By the end of the lesson, pupils/students should be able to:

Cognitive Domain

Explain the purpose of a bank reconciliation statement.
Identify items that require adjustment in the cash book before reconciliation.
Prepare an adjusted cash book correctly.
Prepare a bank reconciliation statement from a cash-book balance or bank-statement balance.
Explain how a bank overdraft changes the interpretation of debit and credit balances.

Affective Domain

Appreciate the importance of accuracy and regular reconciliation in financial records.
Show willingness to investigate differences rather than force balances to agree.

Psychomotor Domain

Enter bank charges, direct credits/debits and dishonoured cheques in an adjusted cash book.
Arrange reconciling items logically in a reconciliation statement.

Check a worked reconciliation with a partner and explain any difference found.

Reference Materials

Approved SSS Financial Accounting curriculum/scheme of work.
Relevant State Unified Scheme of Work.
Approved Financial Accounting textbook for SSS 2.
Teacher-prepared cash-book and bank-statement exercises.

Instructional Materials

Sample cash book and bank statement.
Calculator.
Whiteboard/marker or accounting-format chart.
Prepared worksheet containing reconciliation items.

Rationale for the Lesson

A bank reconciliation statement helps a business explain why the bank column of its cash book and the bank statement may show different balances on the same date. The lesson develops accuracy, error checking and understanding of timing differences in banking records.

Prerequisite/Previous Knowledge

Students should understand the cash book, debit and credit entries, bank transactions and basic balancing of ledger-style accounts.

Lesson Content/Board Summary

Meaning and Purpose of Bank Reconciliation

A bank reconciliation statement is a statement prepared to explain the difference between the balance shown by the bank column of the cash book and the balance shown by the bank statement at a particular date.

Why the Two Balances May Differ

Cheques issued by the business but not yet presented to the bank.
Cash or cheques lodged by the business but not yet credited by the bank.
Bank charges, standing orders, direct debits or interest entered by the bank before the business records them.
Direct credits or transfers received into the bank account that are not yet in the cash book.
Dishonoured cheques.
Errors in either record, which must be investigated and corrected where appropriate.

Step 1: Prepare the Adjusted Cash Book

Items already known to the bank but not yet entered in the cash book are first recorded in the cash book. Typical examples are bank charges, standing orders, direct debits, interest received, direct credits and dishonoured cheques. Timing items such as unpresented cheques and uncredited lodgements are not entered in the adjusted cash book simply because they are outstanding.

Worked Example: Adjusted Cash Book

The cash-book bank column of XYZ Ltd shows a debit balance of ₦15,000. The bank statement reveals bank charges ₦300, interest received ₦120, a dishonoured cheque ₦1,500 and a direct debit ₦800.

Adjusted balance = ₦15,000 + ₦120 − ₦300 − ₦1,500 − ₦800 = ₦12,520 debit.

This is a positive bank balance, not an overdraft. The earlier truncated version of this lesson incorrectly described ₦12,520 as a credit balance; the corrected treatment is debit.

Step 2: Prepare the Bank Reconciliation Statement

After the cash book has been adjusted, use the adjusted balance and account for timing differences. The exact add/subtract direction depends on whether the statement starts with the adjusted cash-book balance or the bank-statement balance, so students should follow one consistent format.

Example Starting with Adjusted Cash-Book Debit Balance

Assume the adjusted cash-book balance is ₦12,520. Cheques issued but not yet presented total ₦2,000, while lodgements not yet credited total ₦1,250.

Adjusted cash-book balance                         ₦12,520
Add: unpresented cheques                             2,000
                                                   -------
                                                    14,520
Less: uncredited lodgements                          1,250
                                                   -------
Balance as per bank statement                      ₦13,270
                                                   =======

Bank Overdraft

A bank overdraft exists when withdrawals exceed the money available in the account and the bank has allowed the account to go below zero. In the business cash book, an overdraft is normally a credit balance in the bank column. On a traditional bank statement, the bank may show the customer’s overdraft differently because the bank records the account from its own perspective. Students must identify the balance type before deciding whether to add or subtract reconciling items.

Checks Before Finalizing a Reconciliation

Confirm that all bank-only items have been entered in the cash book.
Do not duplicate the same item in both the adjusted cash book and the reconciliation statement.
Check dates and amounts carefully.
Investigate errors rather than using an unexplained balancing figure.
Label debit balance or overdraft clearly.

Teaching Methods/Instructional Techniques

Explanation, worked examples, guided calculation, pair checking and board demonstration.