How To Do Bank Reconciliation Statements
Options on where to do it:
- Enter a reconciliation summary underneath the relevant month in the cash book, or
- Prepare a bank reconciliation form, or
- Invest in bookkeeping software that has reconciliation capabilities.
If you are keeping a manual cash book you need to
check off each cash book 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 cash book next to the relevant entry.
If there are extra entries in the cash book 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 cash book once you find out what they are. They might be:-
Outstanding cheques/withdrawals* - these are
cheques that your business has entered into the cash book 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 cash book, 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 cash book.
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 cheques/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 Cash Book
See the example of this reconciliation underneath the cash book spreadsheet.
Bank Reconciliation Form
If you don’t want to enter the reconciliation into the cash book, you can use a form instead. Click here to download a template. See below for a completed example of this template.