Bank reconciliation basics Updated November 2026

Bank reconciliation format

A bank reconciliation statement has two sections. The bank section starts with the statement balance, adds deposits in transit, deducts outstanding checks and corrects bank errors. The book section starts with the ledger balance, adds interest and collections, deducts fees and NSF checks and corrects book errors. Both end at the adjusted cash balance.

Syntax

Balance per bank -> +DIT -OC +/- bank errors -> Adjusted bank balance | Balance per books -> +Interest +Collections -Fees -NSF +/- book errors -> Adjusted book balance

Part	What it is
`Heading`	Company name, Bank Reconciliation, bank account, as of date
`Bank section`	Items the bank does not know about yet
`Book section`	Items the company did not know about until the statement arrived
`Adjusted balance`	The same figure at the bottom of each section

Examples

Balance per bank statement, Jan 31       6,340
Add: Deposit in transit                    1,200
Less: Outstanding checks #210, #214        (860)
Adjusted bank balance                      6,680

Balance per books, Jan 31                  6,715
Add: Interest earned                           5
Less: Service charge                         (40)
Adjusted book balance                      6,680

Result: Both sections end at 6,680, so the reconciliation is complete.

Balance per bank 2,000; outstanding checks 500; deposit in transit 300
Balance per books 1,850; NSF check 60; bank error (check charged twice) 110

Result: Bank: 2,000 + 300 - 500 + 110 = 1,910. Books: 1,850 - 60 = 1,790. Not equal: 120 is unexplained, so the search continues.

A format that does not balance is a working paper, not a finished reconciliation.

Common mistakes

Putting bank fees in the bank section: the bank already deducted them, so they belong in the book section.
Mixing signs: bank errors are corrected on the bank side with the sign that moves the statement toward the truth, book errors on the book side.
Leaving out the as-of date: a reconciliation is a snapshot; items are outstanding as of that date.

Practice Bank reconciliation format

These drills check your answer on live data, free, no account needed.

Both kinds of timing differenceClassify every line on the bank statement and in the cash book, then enter the adjusted bank and book balances.
A busy monthClassify every line on the bank statement and in the cash book, then enter the adjusted bank and book balances.

Questions

Is there a one-column format?

Yes, some start from the bank balance and adjust all the way to the book balance in one column. The two-column format is clearer because it separates what needs journal entries from what does not.

What goes in the heading?

Company name, the words Bank Reconciliation, the bank and account, and the statement date.

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.
Reconciling itemsEvery reconciling item in a bank reconciliation by side: deposits in transit, outstanding checks, bank errors; fees, interest, NSF checks, book errors.
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.