Bank Reconciliation

bank reconciliation accounting help

Bank Reconciliation Accounting

The bank reconciliation is divided into bank section and company section.

How to do bank reconciliation the bank section:

  • Enter the cash balance at the end of the month from the bank statement
  • Add an unrecorded deposit using data from company statement
  • Deduct the outstanding checks unpaid by bank compared the data between statements
  • Define an adjusted balance of bank section

How to do bank reconciliation the company section:

  • Enter the ending cash balance according to the company statement
  • Add a note receivable and interest collected by bank but not recorded by company
  • Add an error in recording check by company bookkeeper
  • Add an interest earned by company but not recorded yet in its cash statement
  • Deduct a check returned as of insufficient funds
  • Deduct a bank fee
  • Deduct the payments of utilities and telephone bills
  • Define an adjusted balance of company section
  • To check that bank and company adjusted balances are equal.

bank reconciliation sampleThe bank reconciliation for Zip Flyer Inc. for at May 31, 2017, is presented below. The unadjusted bank balance will be increased by the amount of not recorded deposit of $3,000 and deducted the four outstanding checks by the total amount of $1,774.

The unadjusted cash balance of firm will be increased by the note and interest collected by the bank of $4,300, error in recording checks of $18, and interest revenue of $1. The cash balance must be decreased by the amount of returned check of $600, bank fee of $5, and electronic fund transfers for utilities and telephone bills by $300 and $100 respectively.


Accounting Bank Reconciliation

Cash balance of the Company requires the adjusting entries.

The entries which will increase the cash balance are presented the followings:

  1. Recording collected note of $4,000 and interest earned of $300
Debit Credit
Cash 4,300
Note Payable 4,000
Interest Revenue 300
  1. Recording interest earned on the ending cash balance of $1
Debit Credit
Cash 1
Interest Revenue 1
  1. Recording error of Check#80 of $18
Debit Credit
Cash 18
Interest Revenue 18

The entries which will decrease the cash balance are presented the followings:

  1. Recording retuned check of $600 from W.White
Debit Credit
Accounts Receivable – W.White 600
Cash 600
  1. Recording utilities and telephone bills paid
Debit Credit
Utilities Expense 300
Telephone Expense 100
Cash 400
  1. Recording bank fee of $5
Debit Credit
Miscellaneous Expense 5
Cash 5

accounting bank reconciliation example

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Bank Reconciliation
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