Check Register Reconciliation

Objectives:• Reconcile a bank statement• Reconcile and correct a check

register

Reconcile the Bank Statement

Banks keep track of checking account transactions and send a monthly report, called a bank statement, to depositors.

Sample Bank Statement

Bank Statement Typical items on a bank statement

Checks paid by the bank Deposits, including interest earned ATM withdrawals Service charges

Interest earned is money paid to customers for the use of their money.

A service charge is a deduction made by the bank for handling the checking account.

Canceled Check A canceled check is a check that the bank has paid and then marked so it can not be used again.

Transactions Outstanding Checks that are not returned by the

bank are called outstanding checks. This means that the checks have not

yet been received or paid by the bank.

An outstanding deposit occurs when a deposit is made after the closing date of the bank statement and the deposit is recorded in the check register.

Reconciliation The difference in the checkbook

balance and the bank statement balance is the result of the outstanding transactions, interest earned, and the service charge.

To bring both balances into agreement and to make sure the bank’s records are correct, both records must be reconciled.

Reconcile the Bank Statement

Follow the steps on the reconciliation form on the back of the bank statement. Enter Closing Balance from Statement Add any deposits outstanding Add lines 1 and 2 Enter total of Checks Outstanding Subtract line 4 from line 3. This amount

should equal your check register balance.

Sample Bank Reconciliation Form

BUSINESS TIP • Outstanding items (checks and

deposits) are items that you have recorded in your check register but the bank has not yet received.

• That means they have not subtracted outstanding checks from the bank balance nor added outstanding deposits to the bank balance.

• These are two reasons why your balance doesn’t match the bank’s balance.

Reconcile the Check Register

Add interest to the balance in the check register.

Deduct service charges from the check register.