ReconciledrillBank reconciliation example, worked step by step
This is a full month-end bank reconciliation for Island Fresh Market, December 2026: the bank statement, the cash book, every line classified, the reconciliation statement with both adjusted balances agreeing, and the journal entries that follow. It is one of the exercises on Reconciledrill, shown here with the answer filled in.
Step 1: the two records
The bank says the balance is 20,287.43. The cash book says 24,263.17. Both are correct from their own point of view; the reconciliation explains the difference and finds anything that still has to be recorded. The opening balances already differ (31,050.00 at the bank, 29,840.00 in the books) because of last month's outstanding items, which are listed first.
Outstanding at the end of last month
| Description | Check | Deposit | Classification |
|---|---|---|---|
| Check 1102, Blue Line Freight | 1,210.00 | Cleared this month |
Bank statement
| Date | Description | Withdrawals | Deposits | Classification |
|---|---|---|---|---|
| Dec 2 | Deposit | 2,170.95 | Cleared this month | |
| Dec 3 | Check 1102 | 1,210.00 | Cleared this month | |
| Dec 6 | Check 1105 | 2,105.97 | Cleared this month | |
| Dec 8 | Check 1106 | 886.77 | Cleared this month | |
| Dec 14 | Deposit | 1,368.25 | Cleared this month | |
| Dec 17 | Check 1107 | 2,165.54 | Cleared this month | |
| Dec 18 | Check 1108 | 69.10 | Cleared this month | |
| Dec 18 | Check 1109 | 1,102.27 | Cleared this month | |
| Dec 19 | Check 1111 | 618.21 | Cleared this month | |
| Dec 20 | Check 1110 | 2,072.36 | Cleared this month | |
| Dec 21 | Deposit | 831.13 | Cleared this month | |
| Dec 22 | Check 1112 | 1,550.35 | Cleared this month | |
| Dec 25 | Check 1113 | 1,480.84 | Cleared this month | |
| Dec 26 | Check 1114 | 290.14 | Cleared this month | |
| Dec 28 | Check 1115 | 1,570.46 | Cleared this month | |
| Dec 31 | Interest credit | 24.11 | Interest earned | |
| Dec 31 | Monthly service charge | 35.00 | Bank fee |
Cash book
| Date | Description | Payments | Receipts | Classification |
|---|---|---|---|---|
| Dec 2 | Deposit, invoice payments | 2,170.95 | Cleared this month | |
| Dec 2 | Check 1105, Pinnacle IT | 2,105.97 | Cleared this month | |
| Dec 7 | Check 1106, Mendez Cleaning | 886.77 | Cleared this month | |
| Dec 13 | Deposit, invoice payments | 1,368.25 | Cleared this month | |
| Dec 13 | Check 1107, City Utilities | 2,165.54 | Cleared this month | |
| Dec 16 | Check 1108, Seaview Catering | 69.10 | Cleared this month | |
| Dec 17 | Check 1109, Delta Telecom | 1,102.27 | Cleared this month | |
| Dec 17 | Check 1110, Prime Print Shop | 2,072.36 | Cleared this month | |
| Dec 17 | Check 1111, City Utilities | 618.21 | Cleared this month | |
| Dec 19 | Check 1112, Seaview Catering | 1,550.35 | Cleared this month | |
| Dec 20 | Deposit, cash sales | 831.13 | Cleared this month | |
| Dec 21 | Check 1113, Seaview Catering | 1,480.84 | Cleared this month | |
| Dec 23 | Check 1114, Pinnacle IT | 290.14 | Cleared this month | |
| Dec 24 | Check 1115, Prime Print Shop | 1,570.46 | Cleared this month | |
| Dec 30 | Check 1116, City Utilities | 612.45 | Outstanding check | |
| Dec 31 | Deposit, card sales | 4,875.30 | Deposit in transit | |
| Dec 31 | Check 1117, Northside Hardware | 298.00 | Outstanding check |
Step 2: match and classify every line
Tick off every line that appears on both records with the same amount: those have cleared and need nothing. What is left are the reconciling items, highlighted above. A line that is only in the cash book is a timing difference (a deposit in transit or an outstanding check) and adjusts the bank side. A line that is only on the bank statement is something the company did not know about yet (interest, a fee, an NSF check, a collection) and adjusts the book side. Last month's outstanding checks that appear on this statement have cleared and need nothing more.
Step 3: the reconciliation statement
| Balance per bank statement | 20,287.43 |
| Add: deposits in transit | |
| Deposit, card sales | +4,875.30 |
| Less: outstanding checks | |
| Check 1116, City Utilities | -612.45 |
| Check 1117, Northside Hardware | -298.00 |
| Adjusted bank balance | 24,252.28 |
| Balance per cash book | 24,263.17 |
| Add: interest and collections | |
| Interest credit | +24.11 |
| Less: fees and NSF checks | |
| Monthly service charge | -35.00 |
| Adjusted book balance | 24,252.28 |
Both sides end at 24,252.28, the true cash balance. If they did not agree, something would still be unexplained: a line on the wrong side, a correction with the wrong sign, or a transposition (a difference divisible by 9 is the classic sign).
Step 4: the journal entries
Only the book side is recorded. Timing differences are already in the books, and the bank corrects its own errors. Each entry below brings the cash account to the adjusted balance.
| Item | Debit | Credit | Amount |
|---|---|---|---|
| Interest credit | Cash | Interest income | 24.11 |
| Monthly service charge | Bank charges expense | Cash | 35.00 |
The rules in one table
| Item | Where it shows up | Side adjusted | Journal entry? |
|---|---|---|---|
| Deposit in transit | Cash book only | Bank, added | No |
| Outstanding check | Cash book only | Bank, deducted | No |
| Bank error | Bank statement, wrong amount | Bank, corrected | No, the bank fixes it |
| Interest earned | Bank statement only | Books, added | Dr Cash, Cr Interest income |
| Note collected by the bank | Bank statement only | Books, added | Dr Cash, Cr Notes receivable |
| Bank service charge | Bank statement only | Books, deducted | Dr Bank charges expense, Cr Cash |
| NSF check | Bank statement only | Books, deducted | Dr Accounts receivable, Cr Cash |
| Error in the books | Cash book, wrong amount | Books, corrected | Yes, to the original account |
Now do one yourself
Reconciledrill has 30 bank reconciliation exercises that work exactly like this one, from a single deposit in transit to full month-end closes with every kind of item. Every line, both balances and the entries are checked instantly. Seven are free without an account.
Start practicing freeQuestions
What is a bank reconciliation?
A comparison of the cash balance in a company's books with the balance on its bank statement for the same date, listing every item that explains the difference. When both adjusted balances agree, the cash records are complete and the reconciliation is done.
Which items go on the bank side and which on the book side?
The bank side gets items the company has already recorded but the bank has not: deposits in transit (added) and outstanding checks (deducted), plus any bank error. The book side gets items the bank has recorded but the company has not: interest and collections (added), service charges and NSF checks (deducted), plus any error in the books.
Which items need a journal entry?
Only the book side. Interest earned, notes collected, bank fees, NSF checks and corrections of book errors change the cash account, so each one is recorded. Deposits in transit and outstanding checks are already in the books, and bank errors are fixed by the bank.
What is a deposit in transit?
A deposit the company recorded in its cash book, usually at the end of the month, that the bank had not yet processed on the statement date. It is added to the bank balance and normally appears on the next statement.
What is an outstanding check?
A check the company has written and recorded, which the payee has not yet presented to the bank. It is deducted from the bank balance. A check that is still outstanding after several months is followed up with the payee.
What if the two adjusted balances do not agree?
Something is still unexplained. Check for a transposition (a difference divisible by 9 points to swapped digits), a line classified on the wrong side, a sign error on a correction, or a last-month item that cleared this month and was adjusted twice.