A bank reconciliation proves that the cash balance on the books agrees with the bank. Enter the reconciling items on each side to see adjusted balances, any unreconciled difference, and the journal entries the books need.
How it works
Reconcile the bank statement to the general ledger cash balance: deposits in transit, outstanding checks, bank charges, interest, NSF items and errors, with the adjusting entries needed on the books.
Adjusted bank = Bank balance + Deposits in transit − Outstanding checks ± Bank errors
Adjusted book = Book balance + Interest + Bank collections − Fees − NSF checks ± Book errors
Reconciled when Adjusted bank = Adjusted bookCommon uses
- Month-end close cash reconciliations
- Small-business bookkeeping
- Accounting coursework and training
Worked example
The calculator above opens with this example. Change any input to see the results update instantly, or select Reset to return to these figures.
| Bank statement ending balance | $84,326.15 |
| Deposits in transit | 12,450.00 3,180.50 |
| Outstanding checks | 4,215.00 1,860.75 925.40 |
| Bank errors (+ increases bank balance) | $0 |
| General ledger (book) balance | $94,184.30 |
| Interest earned not recorded | $46.20 |
| Collections by bank not recorded | $0 |
| Bank service fees | $35 |
| NSF (returned) checks | $1,240 |
| Book errors (+ increases book balance) | $0 |
| Adjusted bank balance | $92,955.50 |
| Adjusted book balance | $92,955.50 |
| Unreconciled difference | $0.00 |
| Book adjustments to record | 3 |
Journal entries to record: Dr Cash / Cr Interest income $46.20; Dr Bank service charges / Cr Cash $35.00; Dr Accounts receivable / Cr Cash $1,240.00 (NSF checks).
Interpreting the results
- Only book-side items require journal entries; bank-side items clear on their own in later statements.
- Follow up on outstanding checks older than 90 days and on deposits in transit that do not clear within a few days.
- Have someone other than the preparer review and sign the reconciliation as a segregation-of-duties control.
Frequently asked questions
Which items require journal entries?
Only book-side items need journal entries: bank fees, interest earned, collections made by the bank, NSF checks and errors in the company’s records. Bank-side items such as deposits in transit and outstanding checks clear the bank in later periods.
What should I do if the reconciliation does not balance?
Check for transposed numbers, amounts recorded in the wrong period, checks that cleared at a different amount than recorded, and transactions missing from either the bank statement or the ledger. A difference divisible by 9 often indicates a transposition.
How often should bank accounts be reconciled?
Reconcile every account at least monthly as part of the close, and more often for high-volume accounts. Prompt reconciliation catches errors and fraud while the details are still easy to research.
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