Reconciledrill

Bank reconciliation and month-end close, one page per topic

Bank reconciliation and the month-end close explained one topic at a time: the steps, deposits in transit, outstanding checks, NSF checks, bank and book errors, the journal entries, and the close checklist, each with the direct answer, a worked example with numbers, common mistakes, and the Reconciledrill exercises that practice it.

40 topics, each with the direct answer, syntax, worked examples, the mistakes people make and the drills that practice it. Updated November 2026.

Bank reconciliation basics

  • Bank reconciliation stepsThe steps of a bank reconciliation: tick deposits and checks, adjust the bank balance for timing items, adjust the books for bank items, match and post.
  • Bank reconciliation formatThe standard bank reconciliation format: a bank side starting from the statement balance and a book side starting from the ledger, both ending at one figure.
  • Adjusted bank balanceAdjusted bank balance = statement balance + deposits in transit - outstanding checks, plus or minus bank errors. Worked examples with exact results.
  • Adjusted book balanceAdjusted book balance = ledger cash + interest + notes collected - service charges - NSF checks, plus or minus book errors. Examples and the matching entries.
  • Reconciling itemsEvery reconciling item in a bank reconciliation by side: deposits in transit, outstanding checks, bank errors; fees, interest, NSF checks, book errors.
  • Reconciliation does not balanceWhen the adjusted bank and book balances differ, the difference tells you where to look: divisible by 9 means a transposition, twice an item means a sign.
  • Bank reconciliation in ExcelBuild a bank reconciliation in Excel: a bank section and a book section with SUM formulas, an outstanding checks list, a difference cell that must read zero.
  • Bank reconciliation in QuickBooksReconcile a bank account in QuickBooks Online: enter the statement ending balance and date, tick cleared transactions until the difference is zero, finish.

Timing differences

  • Deposits in transitA deposit in transit is cash recorded in the books that the bank has not yet credited. Add it to the bank statement balance and make no journal entry.
  • Outstanding checksAn outstanding check has been written and recorded but has not cleared the bank. Subtract the total from the statement balance and carry unpaid ones forward.
  • Prior month outstanding checksHow last month's outstanding checks and deposits in transit roll into this month's bank reconciliation: remove those that cleared, keep those that did not.
  • Stale checksA stale check has been outstanding past the bank's honoring period, often six months. How to confirm it, void it, restore cash and the liability, escheat.

Bank-side items

  • Bank service chargeA bank service charge appears on the statement before the books know about it. Subtract it from the book balance and post Dr Bank Fees / Cr Cash.
  • Interest earnedInterest the bank credits appears on the statement first. Add it to the book balance in the reconciliation and post Dr Cash / Cr Interest Income.
  • NSF checkAn NSF (non-sufficient funds) check is a customer check the bank bounced after deposit. Subtract it from the book balance, reinstate the receivable, add fees.
  • Note collected by the bankWhen the bank collects a note receivable or customer payment, the statement shows it before the books. Add principal and interest on the book side, post it.

Errors

  • Bank errorsA bank error is a mistake on the statement, such as another company's check charged to your account. Correct it on the bank side, no entry, and tell the bank.
  • Book errorsA book error is a company mistake in recording cash: a check entered for the wrong amount or a deposit recorded twice. Adjust the book side and correct it.
  • Transposition errorA transposition error swaps two digits, such as 540 entered as 450. The difference is always divisible by 9, which makes it quick to spot in a reconciliation.
  • Deposit recorded for the wrong amountWhen a deposit is recorded in the cash book for a different amount than the bank received, the books are off by the difference. Which side, which entry.
  • Check recorded twiceA check entered twice in the cash book understates cash by the duplicate amount. Add it back on the book side and reverse the duplicate; same for a deposit.

Journal entries

  • Bank reconciliation journal entriesThe journal entries that follow a bank reconciliation, one per book-side item: service charges, interest, NSF checks, notes collected, book errors.
  • NSF check journal entryThe journal entry for an NSF (bounced) check: debit Accounts Receivable and credit Cash for the check amount, then record the fee as an expense or bill it.
  • Bank fee journal entryRecord bank fees from the statement with a debit to Bank Service Charges and a credit to Cash. Monthly fees, wire fees, NSF fees and merchant fees.
  • Interest income journal entryRecord bank interest with a debit to Cash and a credit to Interest Income when the statement shows it. Includes the accrual version for interest not yet paid.
  • Correcting entryA correcting entry fixes a mistake in a posted transaction: reverse the wrong part and record the right one, or post the net difference. Examples by error.

Month-end close

  • Credit card reconciliationReconcile a company credit card like a bank account with a liability balance: match charges to receipts, record the payment as a transfer, split out fees.
  • Petty cash reconciliationReconcile petty cash by counting the cash on hand, adding the vouchers, and comparing the total to the fund amount. Replenishment entry, cash over and short.
  • Accounts receivable reconciliationReconcile accounts receivable by agreeing the general ledger control account to the customer aging, then explaining any difference: unapplied cash, journals.
  • Accounts payable reconciliationReconcile accounts payable in two directions: the AP aging to the general ledger control account, and each major vendor statement to the ledger.
  • Intercompany reconciliationReconcile intercompany receivables and payables so what one entity shows as due from matches what the other shows as due to. Timing, FX and the elimination.
  • Balance sheet reconciliationA balance sheet reconciliation supports each ledger balance with independent evidence: a bank statement, an aging, a schedule or a roll-forward. Sign-off.
  • Month-end close checklistA month-end close checklist in sequence: cutoff, bank and card reconciliations, AR and AP, accruals and prepaids, fixed assets, balance sheet recs, lock.
  • CutoffCutoff means every transaction is recorded in the period it belongs to: sales when goods ship, purchases when received. How to test cutoff and fix an error.
  • Accruals at month-endHow to accrue expenses incurred but not yet billed and revenue earned but not yet invoiced at month-end, with worked entries and the reversal next month.
  • Prepaid expense scheduleBuild a prepaid schedule listing each prepayment, its term and the monthly amortization, so the Prepaid Expenses balance is supported every month. Entries.
  • Fixed asset reconciliationReconcile the fixed asset register to the general ledger with a roll-forward of cost and accumulated depreciation: opening, additions, disposals, closing.
  • Suspense accountA suspense account temporarily holds entries whose correct account is unknown, such as an unidentified bank receipt. Post, investigate, clear before close.
  • Reconciliation controlsThe internal controls around reconciliations: the preparer does not handle cash, a reviewer signs off, statements come from the bank, items are aged.
  • Year-end closeThe year-end close adds closing entries and annual tasks to the usual month-end: reconcile every balance sheet account, finalize adjustments, close to equity.

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