Bank Reconciliation Examples

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Banks have made loans as early as 2000 B.C., and the Bank of Barcelona, in Spain, was the first to offer basic banking services as we know them today. Since these times, record keeping has evolved to meet the needs of a more complex banking system, producing a standard reconciliation process. Today's bank reconciliations are a tool that can help both individuals and businesses determine the accuracy of account ledgers and bank balances. There is an abundance of methods to do bank reconciliations, any of which are adequate and should give the same results.

Components of Bank Reconciliations

  • Bank reconciliations should be based on a listing of all checks, withdrawals and deposits recorded in your ledger. Your ledger is most likely a check register, a spreadsheet or a software program. You will also need bank statements for the period you are reconciling. The most common period is one month in length, but the statement dates may not coincide with the start or end of each month. You will also need blank paper, a form or software to record uncleared and unrecorded transactions.

Methods of Bank Reconciliation

  • Doing a manual bank reconciliation requires comparing your bank statement to the ledger, and putting a check mark beside each transaction in the ledger that is cleared. Once all the cleared transactions are checked, you will total the uncleared transactions and any bank imposed fees and credits. These totals are then placed on your paper or form. The sum of the beginning balance, uncleared transactions and bank fees and credits should total the book balance at period end.

    Electronic reconciliations require you to use software. You will use the reconciliation feature and check each transaction that cleared your bank. You will then add any bank fees or credits from your bank statement. The program will determine if your reconciliation is accurate and produce a reconciliation report you save or print.

Examples

  • In the following example, there is no difference in the book and bank balance indicating the reconciliation is complete.

    Bank Balance as of beginning of statement period: $1879.21

    Transactions:
    Uncleared Checks/Withdrawals (2709.63)
    Deposits in Transit 1276.92
    Bank Fees (12.00)
    Interest Earned 0.76
    Total 435.26
    Ending Book Balance $435.26
    Difference 0.00

    The following example shows a difference between the bank and book balance of $11.24. One of the most common errors in bank reconciliations is not recording your bank fees and credits. The total of the bank fee and the interest earned totals the difference. Recording these transactions in the ledger will match your book and bank balances.

    Bank Balance as of beginning of statement period: $1879.21

    Transactions:
    Uncleared Checks/Withdrawals (2709.63)
    Deposits in Transit 1276.92
    Bank Fees (12.00)
    Interest Earned 0.76
    Total 446.50
    Ending Book Balance $435.26
    Difference 11.24

    In the following example, there is a $100 difference between the bank and book balance. To determine where the discrepancy exists, you go through and total the checks and withdrawals and then the deposits. Here, you will see there is a check that was erroneously recorded as $400 in the ledger and the bank cleared the transaction for $500.

    Bank Balance as of beginning of statement period: $1879.21

    Transactions:
    Uncleared Checks/Withdrawals (2609.63)
    Deposits in Transit 1276.92
    Bank Fees (12.00)
    Interest Earned 0.76
    Total 535.26
    Ending Book Balance $435.26
    Difference 100.00
    Erroneous Transaction (book) (400.00)
    Erroneous Transaction (bank) (500.00)
    Error Net (100.00)
    New Difference 0.00

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