How to prepare a simple Bank Reconciliation

Finance article from Cashflow Finder

You will need your Bank Statements, Cheque book and Deposit Book.

Here’s how to prepare your Bank Reconciliation:

Tick off each cheque that shows on the bank statement as presented, starting with most recent bank statement, against the corresponding cheque stub (or against the cheque entries in your cash book if you maintain one). Then see which cheques have not been presented and make a list of them, showing the cheque number, date drawn, the name of the payee and the amount.

Do the same for deposits - tick off each deposit that shows on the bank statement, starting with most recent bank statement, against the corresponding deposit book stub or carbon copy (or against the deposit entries in your cash book if you maintain one). It is most unlikely that there will be any outstanding deposits (deposits that you have made but which don’t appear on your bank statements) but if there were any, you would make a list of them, showing the date deposited and the amount.

If you have a cashbook and you are going to reconcile to the bank account balance showing in your cashbook, you will first need to make entries in your cashbook for the bank charges and any other direct debits (like monthly finance company payments) that you will have discovered along the way in the bank statements. If you have received any payments from your customers by Electronic Funds Transfer, you will also need to make entries in your cashbook for these as well.

Then you prepare a simple statement like this:

Bank Reconciliation as at 31 December 2008

(& balance as per cashbook if applicable)

If you do this weekly, it is quick and easy, and you always know how much you really have in the bank.

We hope this finance article helps you prepare your own Bank Reconciliation.