Reconciling a Bank Statement

1. Reconciling a Bank Statement Unit 1.4

2. Bank Statement • Is a report provided by a bank to the depositor showing the condition of the account • Shows the following: • Balance at beginning of the month • Checks paid by the bank • Deposits made • Service or other charges • Balance at end of the month

3. Examining Your Returned Checks and Deposit Slips • Banks will return your: • Canceled checks • Canceled Check – a check that has been paid by the bank • Deposit slips

4. Comparing Your Records with the Bank’s Record • Bank Reconciliation – a statement showing how a check register balance and a bank statement balance are brought into agreement • Reasons why bank statements and check registers will differ: • May have outstanding checks (a check given to the payee by not yet returned to the bank for payment) • Service Charge – a fee charged for checking account services • Mailed deposit or made deposit that was not processed by the bank prior to bank statement preparation • An error made by you or bank

6. Steps for Reconciling a Bank Statement • Open your Check Register • Remove the checks and deposits slips included with the bank statement • Remove deposit receipts from Cash or Office Files • Staple each deposit receipt with the deposit slip that matches

7. Steps for Reconciling a Bank Statement • On page 1 of the bank statement, find the LAST BALANCE SHOWN • On the bank reconciliation form (page 2 of the bank statement), WRITE the last balance amount of the balance shown on bank statement line • WRITE the balance from the last check register entry on the balance shown in checkbook line

8. Steps for Reconciling a Bank Statement • Complete the left side of the form • Arrange deposit slips in chronological order • Compare the amounts on the deposit slips with the record of your deposits on the check register • Make a record of deposits that have been cleared • Put a C or cleared in the √/C column for amount that agrees with an amount on the deposit slip • Keep you check register open

9. Steps for Reconciling a Bank Statement • Complete the left side of the form • Turn to bank reconciliation. List any deposits not on statement under add deposits not on statement. Then add the balance shown on bank statement and the add deposits not on statement and record the total on the total line • Remove any voided checks from the Cash file • Arrange canceled checks in numeric order including any voided checks. Compare the amount on each check with the amount on the check register

10. Steps for Reconciling a Bank Statement • Complete the left side of the form • Make a record of checks that have cleared • Put a C or cleared in the √/C column for amount that agrees with an amount on the deposit slip • Turn back to the bank reconciliation. Complete subtract checks issued but not on statement. List the check number and the amount of any checks on the lines. Add checks together and WRITE total on total line. • Determine the correct bank statement balance. Subtract the total of the section titled subtract checks issued but not on statement from the total above to determine the corrected bank statement balance

11. Steps for Reconciling a Bank Statement • Complete the right side of the form • Write in balance shown in checkbook • On the line after add deposits not already entered in checkbook, list any deposits you have prepared or forgot to write in the check register • If all deposits have been entered in the check register, bring down the amount of the balance shown in checkbook line and write in on the total line

12. Steps for Reconciling a Bank Statement • Complete the right side of the form • Complete the section subtract service charges and other charges not in checkbook. Total the amounts and write the figure on the total line • Determine the corrected checkbook balance. Subtract the total of the section subtract service charges and other charges not in checkbook from the total in above section, or bring down the total if not service charges, etc. • Write the amount as corrected bank statement balance

13. Steps for Reconciling a Bank Statement • Compared the corrected bank statement balance on the left side of the form with the corrected checkbook balance on the right side of the form • If they match, go to step 8 • If they don’t match, double check all math calculations and entries in check register vs. bank statement • Record any other charges in check register that appear on bank statement (i.e. service charges, EFT, etc.) and find new balance • Place everything back into cash file • Return deposit receipts without deposits slips to office file