Monthly bank account reconciliations are vital for protecting both your money and your business. A typical statement lists transactions and the bank balance on the front side and includes a reconciliation worksheet on the back. In addition to balancing account totals, the multi-step process helps you identify errors and discrepancies or may point to potential fraudulent activity taking place in your account during the previous month. Understanding how to reconcile a bank statement manually is important even if you normally reconcile accounts electronically.
Complete a Line-Item Comparison
Find the ending balance on the bank’s reconciliation statement, which most often is on the front side near the top. Record this amount and use it as a starting point. Then complete a line-item comparison in which you match checks, electronic payments, ATM transactions, fees and deposits listed in your register to those listed in each section of the bank statement. Place a check mark next to each matched transaction in your register.
Adjust for Outstanding Amounts
List the amounts for unmatched checks, electronic payments, withdrawals and fees, including the check number or a brief description. Record this number just under the starting balance, subtract it and enter the subtotal. List and total the amounts for unmatched deposits or other credits applied to your account over the previous month. Record and add this number to the subtotal. The ending amount should match the ending balance shown in your register. For example, if your starting point is $600, and you have unmatched transactions totaling $250 and a $100 outstanding deposit, your ending reconciliation and register balance should be $450, or $600 - $250 + $100.
Troubleshooting Reconciliation Errors
Most errors result from incorrectly recording the bank statement balance, missing or incorrectly matching transactions or transposing numbers. However, they can also result from bank statement errors. Review your lists of outstanding transactions and deposits to make sure it includes only unmatched transactions, complete another line item comparison and check your calculations. If the account still doesn’t balance, review the statement with a banking representative to see if the problem lies with your bank.
- Photo Credit Michael Hoerichs/iStock/Getty Images
How to Reconcile Bank Statements in Quickbooks
While reconciling a bank account is not usually a fun or interesting job, it is nevertheless an important monthly task. Banks can...
How to Reconcile a Bank Statement to the General Ledger
A general ledger account should mirror a business checking account, because it should reflect all deposits and checks made to and from...
What is a Bank Reconciliation Statement?
A bank reconciliation statement is the method used by individuals and entities to check the accuracy of their own transaction register against...
How to Reconcile a Friendship
Losing a friendship can be extremely difficult. Depending on the length of the friendship and the nature of what happened between the...
Bank Account Will Not Reconcile in Peachtree Accounting
Peachtree Accounting includes a bank reconciliation function that allows the user to compare bank statements with the transactions in the program's check...
What Is the Purpose of a Bank Reconciliation Statement?
Bank reconciliation statements reconcile the bank's records with your company's general ledger. This reconciliation should be completed monthly to check for errors...
The Reconciliation of Bank Accounts
Reconciling bank accounts is a common accounting process usually performed once a month, involving all cash accounts, including payroll account. The idea...