Bank reconciliation example worked line by line
This bank reconciliation example follows one month of a small retail business checking account. It has everything a real month throws at you: a late deposit, uncleared checks, bank fees, interest, a returned customer check and a payment entered twice.
March 31
Adjusted balances
- Balance per bank statement
- 24,860.00
- Add deposit in transit
- 3,150.00
- Less outstanding checks
- -2,355.50
- Adjusted bank balance
- 25,654.50
- Balance per books
- 25,532.10
- Interest and fees
- -47.60
- NSF and duplicate
- 170.00
- Adjusted book balance
- 25,654.50
The starting numbers
| Item | Amount |
|---|---|
| Balance per bank statement, March 31 | $24,860.00 |
| Balance per books, March 31 | $25,532.10 |
| Unexplained gap before reconciling | $672.10 |
What the matching found
- A deposit of $3,150.00 made on March 31 is in the books but reaches the bank on April 1. It is a deposit in transit.
- Checks 1042 for $1,200.00, 1045 for $845.50 and 1047 for $310.00 were mailed in March and have not cleared. Together they are $2,355.50 of outstanding checks.
- The bank charged a $35.00 monthly service fee and a $25.00 wire fee that are not in the books.
- The bank credited $12.40 of interest that is not in the books.
- A customer check for $480.00 came back as not sufficient funds.
- A vendor payment of $650.00 was entered in the books twice. The bank paid it once.
Adjusted bank balance
| Line | Amount |
|---|---|
| Balance per bank statement | $24,860.00 |
| Add deposit in transit | $3,150.00 |
| Less outstanding checks | $2,355.50 |
| Adjusted bank balance | $25,654.50 |
Adjusted book balance
| Line | Amount |
|---|---|
| Balance per books | $25,532.10 |
| Add interest earned | $12.40 |
| Less bank service and wire fees | $60.00 |
| Less NSF customer check | $480.00 |
| Add back duplicate vendor payment | $650.00 |
| Adjusted book balance | $25,654.50 |
Both adjusted balances are $25,654.50, so the difference is zero and the account is reconciled.
Adjusting entries from this example
Only the book side items become journal entries. Deposits in transit and outstanding checks need no entry, they clear on next month's statement.
| Entry | Debit | Credit | Amount |
|---|---|---|---|
| Bank fees | Bank service charges | Cash | $60.00 |
| Interest | Cash | Interest income | $12.40 |
| NSF check | Accounts receivable | Cash | $480.00 |
| Duplicate payment reversed | Cash | Accounts payable | $650.00 |
What this example teaches
- Start from both closing balances, not from the gap between them.
- Timing items belong on the bank side, items the bank knows about and you do not belong on the book side.
- One duplicate can hide behind several small fees, so the gap alone never tells you the cause.
- The month is finished only when both adjusted balances agree to the cent.
The same example in BankReconciler
Load the sample files in the demo and you get this month as a real run: the deposit in transit and the three checks under Unmatched in books, the fees, interest and returned check under Unmatched in bank, the duplicate under Duplicates and the four adjusting entries ready to export. Try it on the reconcile bank statement page or download the blank bank reconciliation template.