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Md. Hasan Basri
(Software Consultant)
What is a bank reconciliation?
 A bank reconciliation is a process performed by a
company to ensure that the company's records (check
register, general ledger account, balance sheet, etc.)
are correct and that the bank's records are also correct.
Reason of Difference
 Cheque issued but not presented for payment.
 Cheque deposited but not cleared.
 Charges debited by bank.
 Interest credited by bank.
 Error made either by bank or the company.
Bank Reconciliation Process
 Step 1. Adjusting the Balance per Bank
 Step 2. Adjusting the Balance per Books
 Step 3. Comparing the Adjusted Balances
 Step 4. Preparing Journal Entries
Step 1. Adjusting the Balance per Bank
Step 2. Adjusting the Balance per Books
Step 3. Comparing the Adjusted Balances
After adjusting the balance per bank (Step 1) and after
adjusting the balance per books (Step 2), the two adjusted
amounts should be equal. If they are not equal, you must
repeat the process until the balances are identical. The
balances should be the true, correct amount of cash as of the
date of the bank reconciliation.
Step 4. Preparing Journal Entries
Journal entries must be prepared for the adjustments
to the balance per books (Step 2). Adjustments to
increase the cash balance will require a journal entry
that debits Cash and credits another account.
 All items on the book side of the bank reconciliation
require journal entries.
 If the item is added to book side: Debit Cash
 If the item is subtracted from the book side: Credit Cash
Adjustment at Journal Sample
Sample Exercise:
Introduction to Bank Reconciliation
Introduction to Bank Reconciliation
Introduction to Bank Reconciliation

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Introduction to Bank Reconciliation

  • 2. What is a bank reconciliation?  A bank reconciliation is a process performed by a company to ensure that the company's records (check register, general ledger account, balance sheet, etc.) are correct and that the bank's records are also correct.
  • 3. Reason of Difference  Cheque issued but not presented for payment.  Cheque deposited but not cleared.  Charges debited by bank.  Interest credited by bank.  Error made either by bank or the company.
  • 4. Bank Reconciliation Process  Step 1. Adjusting the Balance per Bank  Step 2. Adjusting the Balance per Books  Step 3. Comparing the Adjusted Balances  Step 4. Preparing Journal Entries
  • 5. Step 1. Adjusting the Balance per Bank
  • 6. Step 2. Adjusting the Balance per Books
  • 7. Step 3. Comparing the Adjusted Balances After adjusting the balance per bank (Step 1) and after adjusting the balance per books (Step 2), the two adjusted amounts should be equal. If they are not equal, you must repeat the process until the balances are identical. The balances should be the true, correct amount of cash as of the date of the bank reconciliation.
  • 8. Step 4. Preparing Journal Entries Journal entries must be prepared for the adjustments to the balance per books (Step 2). Adjustments to increase the cash balance will require a journal entry that debits Cash and credits another account.  All items on the book side of the bank reconciliation require journal entries.  If the item is added to book side: Debit Cash  If the item is subtracted from the book side: Credit Cash