Free Bank Reconciliation Template

The key is to establish a routine that best suits your business’s unique needs and financial activity. A bank reconciliation statement is a document that compares the cash balance on a company’s balance sheet to the corresponding amount on its bank statement. Reconciling the two accounts helps identify whether accounting changes are needed. Bank reconciliations are completed at regular intervals to ensure that the company’s cash records are correct.

Example Cashbook and Reconciliation Worksheet

The final balance on the bank reconciliation statement, after all corrections and adjustments, is the actual “true” cash balance reported in the company’s balance sheet. Consequently, the company’s general ledger cash account and its balance sheet will reflect the reconciled, adjusted, correct and true cash balance. When a company writes a check, the company’s general ledger Cash account is credited (and another account is debited) using the date of the check.

Uncleared checks are checks that have been issued but not yet cashed by the recipient. These can create discrepancies between your bank statement and your cash book. For example, if you issue a check to a supplier at the end of the month, it might not clear contributions 2020 until the following month. If using Numeric, AI will scan and pull the balance from any uploaded bank statements to compare directly against the GL total. These balances sit side-by-side in your auto-generated reconciliation report each month.

Make the necessary adjustments to the bank statement for errors or missing transactions. For instance, if there’s an outstanding check that has yet to be cleared, add it to correct your bank account balance. From there, compare the new, adjusted cash balances of your bank account to your accounting records.

Before attempting the reconciliation write up the cash book as fully as possible by using the following process. Most differences highlighted by the bank reconciliation procedure are due to timing differences as one organisation may have posted an item which the other has not. If there is any discrepancy, review it again; it is sometimes easy to overlook small mistakes. It is sometimes helpful to determine the exact amount of the difference, making it easier to identify and address. To do this, take the balance from the reconciled statement and deduct the balance as per the bank. If you don’t have a separate business bank account, it’s worth opening one for the following reasons.

However, with today’s online banking a company can prepare a bank reconciliation throughout the month (as well as at the end of the month). This allows the company to verify its checking account balance more frequently and to make any necessary corrections much sooner. The purpose of the bank reconciliation is to be certain that the company’s general ledger Cash account is complete and accurate. With the true cash balance reported in the Cash account, the company could prevent overdrawing its checking account or reporting the incorrect amount of cash on its balance sheet. The bank reconciliation also provides a way to detect potential errors in the bank’s records. A bank reconciliation statement is a document prepared by a company that shows its recorded bank account balance matches the balance the bank lists.

• A bank reconciliation template serves as an essential instrument for aligning bank statements with a company’s or individual’s financial records.
• These can include invoices, financial statements from checking accounts, a general ledger, and cashbooks detailing your financial transactions.
• At the bottom of your spreadsheet for February, add this note, tracking changes to your balance.
• Next, dive into your bank statement to find transactions not yet reflected in your company’s books.
• Manual reconciliation using Excel is time-consuming and can be a headache.

Ongoing Bank Reconciliation

In a small business, that responsibility usually falls to the owner (or a bookkeeper, if you hire one. If you don’t have a bookkeeper, check out Bench). In the past, monthly reconciliations were the norm because banks used to issue paper statements on monthly basis. Prepare a bank reconciliation statement for Company A as of 30 September 20XX.

Returned Deposited Checks

Company errors may require additions or subtractions from the company’s general ledger Cash account. One type of error is a transposition error which involves the switching of digits within an amount. For example, the amount $789 might be incorrectly recorded as $798, resulting in a difference of $9. Perhaps $1,458 was recorded as $1,548, resulting in a difference of $90. Another type of error involves omitting or adding a zero, such as recording $500 instead of the actual amount of $5,000 (a difference of $4,500). A bank debit memo is recorded in the bank’s general ledger with a debit to the bank’s liability account Customers’ Deposits (and a credit to another account).

The process also enables the company to record any interest payments the account has earned or fees the bank has charged. The primary advantages of using accounting software include importing a bank statement or utilising a bank feed. Although a bank feed saves time, I have also encountered instances where it posts duplicate transactions. If you are using accounting software with a bank feed or can import the transactions, it will be easier to have the correct figures in your accounts. Bank feeds are generally accurate; however, mistakes can occasionally occur. Completing the reconciliation will ensure that the figures are correct; however, it will not detect if the transaction is posted to the wrong account code.

This step ensures your records accurately reflect your financial status. For some entrepreneurs, reconciling bank transactions creates a sense of calm and balance. If you’re in the latter category, it may be time to think about hiring a bookkeeper who will do the reconciling for you. You can do a bank reconciliation when you receive your statement at the end of the month or using your online banking data. Consider when or why you might need to look back through your financial records for your bank reconciliation, and which method of recording will make the task easier for you based on how you keep your records.

What Is a Bank Reconciliation Statement?

Identify duplicate entries, missing payments, outliers, and unauthorized transactions in real-time, safeguarding against financial fraud. Learn how to build, read, and use financial statements for your business so you can make more informed decisions. Monthly bank service charge of $15 for operating the bank account. Add back any receipts for deposits in transit from a company to the bank, which have been paid in but not yet processed by the bank.

To track cash flow

• By understanding and implementing bank reconciliation, you can keep polished financial records, detect any bookkeeping discrepancies, and ensure that your recorded cash balances are precise.
• Proper documentation is vital for transparency and accountability.
• 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.
• When they draw money from your account to pay for a business expense, they could take more than they record on the books.
• When you look at your books, you want to know they reflect reality.
• For example, if you issue a check to a supplier at the end of the month, it might not clear until the following month.

The bank will regularly send the business a bank statement, or the information can be accessed through online banking, whichlists in date order the money that has gone in and out of the bankaccount. Here you will see a sample and have access to a free, printable template. This information can also be used to balance your personal bank accounts. Search the bank statement for any interest your account earned during the month, then add it to your reconciliation statement.

Therefore, due to an insufficient balance in his account, Mr. Alex was charged $50.00. The difference is clearly due to interest accrued on the note purchased by John. As the interest paid is semi-annual, which is paid out at the end of June and December, the monthly statement for June included this accrued interest. The amount would be calculated based on the Principal on the note.

Therefore, a check dated June 29 will be recorded in the company’s accounts using the date of June 29, even if the check clears (is paid through) the company’s bank account one week later. If done correctly, the final balance on the two statements should agree, that is to say, the adjusted bank statement balance should be the same as the adjusted cash book balance. Many companies produce bank reconciliation statements regularly to ensure they’ve recorded all their banking transactions properly and that their ending balance matches the amount the bank says it has. Bank reconciliation statements are essential for maintaining financial integrity and transparency in businesses. They ensure accuracy, detect errors and irregularities, safeguard against fraud, and enable regulatory compliance.