Free template
Bank reconciliation template
Reconcile a bank account here or in Excel. Enter the statement and ledger balances and the reconciling items; the template shows whether both sides agree and lists the journal entries your books need.
Download the Excel template.xlsx
Formulas included: adjusted balances, the difference, a reconciled check and a journal entry sheet. Works in Excel, Google Sheets and LibreOffice.
Reconciliation
Bank side
Add: deposits in transit4,525.50
Deposits in your books that the bank hadn't posted by the statement date.
Less: outstanding checks4,415.75
Checks and payments in your books that hadn't cleared.
Bank errors–
Positive if the correction increases the bank balance, negative if it decreases it.
Book side
Add: credits not yet in your books18.42
Interest earned, collections the bank received for you.
Less: charges not yet in your books455.00
Service fees, returned (NSF) checks, other bank debits.
Book errors–
Positive if the correction increases your book balance, negative if it decreases it.
Bank reconciliation statement
Bank
- Balance per bank statement
- 48,250.00
- Add: deposits in transit
- Customer deposit, Oct 31
- 3,400.00
- Card settlement, Oct 31
- 1,125.50
- Total
- 4,525.50
- Less: outstanding checks
- #1047 Office lease
- (2,800.00)
- #1052 Supplier payment
- (1,615.75)
- Total
- (4,415.75)
- Adjusted bank balance
- 48,359.75
Books
- Balance per general ledger
- 48,796.33
- Add: credits not yet recorded
- Interest earned
- 18.42
- Total
- 18.42
- Less: charges not yet recorded
- Monthly service fee
- (35.00)
- Returned customer check (NSF)
- (420.00)
- Total
- (455.00)
- Adjusted book balance
- 48,359.75
Reconciled: both sides agree at $48,359.75.
Journal entries to post
| Item | Debit | Credit | Amount |
|---|---|---|---|
| Interest earned | Cash | Interest income | 18.42 |
| Monthly service fee | Bank fees | Cash | 35.00 |
| Returned customer check (NSF) | Accounts receivable | Cash | 420.00 |
How to reconcile a bank account
- Get both balances for the same date: the ending balance on the bank statement and the cash account balance in your general ledger.
- Match transactions. Tick off deposits and payments that appear in both the statement and the ledger.
- Adjust the bank side for deposits you’ve recorded that the bank hasn’t posted (add) and checks or payments that haven’t cleared (subtract).
- Adjust the book side for items on the statement that aren’t in your ledger: interest and other credits (add), service fees and returned checks (subtract).
- Correct errors on whichever side made them.
- Compare the adjusted balances. They should be equal. Post entries for the book-side items, attach the statement, and have someone else review and sign off.
Reconciling items: which side, and which need an entry
| Item | Adjust | Side | Journal entry |
|---|---|---|---|
| Deposit in transit | Add | Bank | None. It clears when the bank posts it. |
| Outstanding check | Subtract | Bank | None. It clears when the payee cashes it. |
| Bank error | Add or subtract | Bank | None. Ask the bank to correct it. |
| Interest earned | Add | Books | Debit cash, credit interest income. |
| Collection by the bank | Add | Books | Debit cash, credit the receivable collected. |
| Service fee | Subtract | Books | Debit bank fees, credit cash. |
| Returned (NSF) customer check | Subtract | Books | Debit accounts receivable, credit cash. |
| Book error | Add or subtract | Books | A correcting entry to the account that was misstated. |
When the reconciliation doesn’t balance
- Look for a transposition. A difference that divides evenly by 9, such as $90 or $0.27, often means two digits were swapped, like 540 entered as 450.
- Look for half the difference. An item entered on the wrong side, added instead of subtracted, creates a difference of twice its amount.
- Check last month’s reconciling items. Deposits in transit and outstanding checks from the prior reconciliation should have cleared or still be listed.
- Check for duplicates in the ledger, such as a payment recorded once from the bill and again from the bank feed.
- Confirm the cut-off. The ledger balance must be as of the statement date, not today.
Bank reconciliation is one step of the month-end close. The month-end close guide covers the rest.
Bank reconciliation: questions
- What is a bank reconciliation?
- A comparison of the cash balance on your bank statement with the cash balance in your general ledger on the same date. Each difference is explained as timing (deposits in transit, outstanding checks), as something one side hasn't recorded yet (fees, interest), or as an error. When both adjusted balances agree, the account is reconciled.
- How often should you reconcile a bank account?
- At least monthly, when the statement arrives, as part of the month-end close. High-volume accounts are often reconciled weekly or daily so month end only covers the last few days.
- Which reconciling items need journal entries?
- Only the book-side items: things on the bank statement that aren't in your ledger yet, such as interest, fees and returned checks, plus corrections of your own errors. Deposits in transit and outstanding checks need no entry; they clear when the bank catches up.
- What should I do about old outstanding checks?
- Follow up with the payee. A check that stays outstanding for months may need to be voided and reissued, and unclaimed funds can be subject to state unclaimed property rules, so check your state's requirements before writing one off.
- Can software or AI reconcile bank accounts?
- Reconciliation software matches bank transactions to ledger entries and flags exceptions, and some tools now use AI to suggest matches and reconciling items for a person to review. See AI reconciliation software for the tools listed in this directory.