How To Do Bank Reconciliation Statements
Options on where to do it:
- Enter a reconciliation summary underneath the relevant month in the cashbook, or
- Prepare a bank reconciliation form, or
- Invest in bookkeeping software that has reconciliation capabilities.
If you are keeping a manual cashbook you need to
check off each cashbook entry against each bank statement entry.
can put a small tick on the bank statement next to the entry and put a tick or an 'R' for reconciled in the cashbook next to the relevant entry.
If there are extra entries in the cashbook that do not show up on the bank statement, or vice versa, you need to highlight or circle them so that you can adjust the cashbook once you find out what they are. They might be:-
Outstanding checks/withdrawals* - these are
checks that your business has entered into the cashbook and sent to
vendors but which did not show up at the bank by the closing date of
your bank statement.
Outstanding deposits/receipts** - these are
payments that you have received into the cashbook, but which were not
deposited to your bank before the bank statement closing date.
Bank Fees and Interest - these are charges that
you would normally only know about after receiving your bank statement.
You will need to enter these into the cashbook.
Other Unidentified Entries - if there are any
other entries missing from either document then you will need to
investigate how they got there and make the necessary adjustments.
* Outstanding checks/withdrawals will be added to the reconciliation
** Outstanding deposits/receipts will be deducted from the reconciliation
If the bank account is in overdraft, then do it the other way around.
Reconciliation in the Cashbook
See the example of this reconciliation underneath the cashbook spreadsheet.
Bank Reconciliation Form
If you don’t want to enter the reconciliation into the cashbook, you can use a form instead (see example below). Click here to download a template.