January Bank Reconciliation

Ma and Pa started their new business Ma & Pa's Antiques and on January 5, xxxx deposited a portion of their life's savings with Wehavemoney State Bank to get started.

Ma and Pa don't know all that "fancy stuff" about bookkeeping but they know the importance of keeping an accurate check book so that they can plan and budget what they can spend and have their current balance available at all times.

Return To Tutorial

Ma and Pa's Checkbook for January xxxx.

Date Reference Number Payee / Description Deposit Amount Deduction
Amount
Balance Reconciled
Jan 5, xxxx Deposit Slip 1 Opening Balance 25000   25000  
Jan 6, xxxx Check 100 Nice Landlord   1000 24000  
Jan 7, xxxx Check 101 Cheap Office Supply   1500 22500  
Jan 8, xxxx Check 102 Old Store   5000 17500  
Jan 8, xxxx Check 103 Smalltown Newspaper   800 16700  
Jan 9, xxxx Check 104 Hotwire Electric   600 16100  
Jan 10, xxxx Check 105 Fixit Right   400 15700  
Jan 11, xxxx Deposit Slip 2 Daily Sales and Collections Report 2000   17700  
Jan 15, xxxx Check 106 Dirtyman Garbage   100 17600  
Jan 6, xxxx Check 100 Nice Landlord   1000 16600  
Jan 16, xxxx Deposit Slip 3 Daily Sales and Collections Report 1000   18600  
Jan 17, xxxx Check 107 Pretty Brochures   200 18400  
Jan 20, xxxx Check 108 Old Store   600 17800  
Jan 20, xxxx Deposit Slip 4 Daily Sales and Collections Report 500   18300  
Jan 23, xxxx Check 110 Sturdy Shipping Crates   750 19050  
Jan 25, xxxx Check 111 Nice Landlord   1000 18050  
Jan 26, xxxx Check 112 Fancy Wholesale Antiques   3000 15050  
Jan 27, xxxx Check 113 Talktoyou Phones   1800 13250  
Jan 26, xxxx Deposit Slip 6 Daily Sales and Collections Report 800   14050  
Jan 28, xxxx Check 114 Talkalot Service   200 13850  
Jan 28, xxxx Deposit Slip 7 Daily Sales and Collections Report 700   14550  
Jan 29, xxxx Check 115 Bean Counter Accounting   300 14250  
Jan 30, xxxx Deposit Slip 8 Daily Sales and Collections Report 2500   16750  
Jan 31, xxxx Deposit Slip 9 Daily Sales and Collections Report 1900   18650  

Well Ma and Pa have made it thru their first month of operations and according to their check book they have a cash balance as of January 31, xxxx of $18,650.

They just received their statement from their bank Wehavemoney State Bank and Ma told Pa that they needed to compare their record (check book) to the record maintained by their bank bank (bank Statement).

The banks cutoff date for Ma & Pa's bank account is the 28th of the month.

Ma & Pa's Bank Statement for January xxxx

Wehavemoney State Bank
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Ma and Pa's Antiques
Account Number: 1111111111
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Balance From Prior Statement 0
Deposits 43800
Disbursements  
Checks 19400
Bank Fees and Charges 85
Other Drafts & Charges 1000
Balance as of Jan 28, xxxxx 23315
 
Deposit Details:
Jan 5 25000
Jan 8 5000
Jan 11 2000
Jan 14 2000
Jan 17 1000
Jan 21 5000
Jan 25 3000
Jan 26 800
 
Total Deposits 43800
 
Disbursement Details:
Jan 8 100 1000
Jan 10 101 1500
Jan 10 ID 400
Jan 11 102 5000
Jan 9 103 800
Jan 10 *104 600
Jan 11   CDP 75
Jan 14   CCF 100
Jan 19 NSF 500
Jan 20 106 100
Jan 20 107 200
Jan 25 108 6000
Jan 25 *109 200
Jan 26 111 1000
Jan 28 112 3000
Jan 28 MSF 10
 
Total Checks 19400
Total Bank Charges & Fees 85
Total Other Drafts & Charges 1000
 
Total Disbursements 20485

Abbreviations
NSF- Non Sufficient Funds Check - also known as a "bad check" -
CDP- Check/Deposit Ticket Printing Fees
CCF- Credit Card Fees - fees charged for processing credit card transactions
MSF- Monthly Service Charge
ID - Insurance Draft -preauthorized deduction

Well we got the two records we need in order to perform a cash reconciliation for the month so let's jump in and do it. We'll list our records below again and begin the process of of comparing the transactions that are entered in each record.

We're going to follow and demonstrate the steps we talked about earlier while we perform our reconciliation.

Steps In Preparing a Bank Reconciliation

  • Probably the first step that should be done is to review your check book for any omitted check numbers or deposits. In other words, double check that all your cash transactions have been recorded in your check book. Since your checks are numbered look for any missing numbers in your check book. Likewise, if you assign a number to your deposit tickets all you need to do is look for any missing numbers.

    You also need to check your additions and subtractions and your calculated balances to make sure that the check book balances have been accurately calculated. While performing your review of your check book also be on the lookout for any transactions that were accidentally recorded twice.

  • If your bank returns your checks in your bank statement and the checks aren't already sorted in numerical order, you need to take the time to put your checks in numerical order. I hate to do this, but it makes it a lot easier if you need to later locate and review an actual check. You also need to review all the checks and make sure that all the checks have the proper signature.
  • Using the section of your bank statement that lists the checks processed by the bank (usually listed in check number order) and your check book or register you need to compare the two records to see what checks have been recorded in your records and what checks have also been recorded by the bank. In addition, you need to make sure that the check number and amounts recorded on your bank statement and in your check book or register also agree. Note that the date of the check transaction on your bank statement may be the same date (rarely) as recorded in your check book or a few days or even weeks later depending on when your payee deposits his/her check in their bank account and when your check is finally processed by your bank.

    This is simply the process of putting a check mark (or any other symbol or notation you want to use) by the check number on the bank statement and also a check mark (or your symbol or notation) by the check number in your check book or register for all the transactions that appear in each record and that have the correct check numbers and amounts. For those transactions that appear in both records but have a different check number or amount place a ? (or any other symbol or notation you want to use) beside the transaction on the bank statement and also a ? (or your symbol or notation) in your check book or register.

    The transactions marked with a ? (or your symbol or notation) need to be investigated to determine what the correct check numbers and amounts are.

    What does the check mark (or your symbol or notation) in both the bank statement and check book mean ? All this means is that the cash transaction, in this case a check, has been accurately recorded in your check book and also recorded by the bank in your bank statement. The check mark (or your symbol or notation) in your check book or register also means that the check has been presented to your bank and paid (cleared).

    Since normally some checks that you write during a given month do not appear on your bank statement in the month written because they have not yet been "cashed", you may find the check that you need to mark in your Check Book listed in it in an earlier month. These type of checks are referred to as Outstanding Checks From a Prior Month. You use your previous month's bank reconciliation as an aide in helping to identify to these checks. You should also place a check mark by them on your prior bank reconciliation to signify that these checks have now been processed and recorded by the bank.

  • You follow the exact same procedure for the deposits listed in the deposit section of your bank statement and the deposits recorded in your check book or register. In other words, place a check mark (or your symbol or notation) by the deposit recorded in the bank statement and also a check mark (or your symbol or notation) by the same deposit recorded in your check book or register. Again, if the amounts are different place a ? (or your symbol or notation) by the deposit on the bank statement and also a ? (or your symbol or notation) beside the deposit in your check book or register. Note that the date of the deposit on your bank statement may be the same date as recorded in your check book or a day or two later due to the time it takes the bank to process your deposit.

    Since at times some of the deposits that you prepare during a given month do not appear on your bank statement in the month written because they have not yet been "processed by your bank, you may find the deposit that you need to mark in your Check Book listed in it in an earlier month. These type of deposits are referred to as Deposits In Transit From a Prior Month. Again, you need to refer to your previous month's bank reconciliation that has these deposits listed. You should also place a check mark by them on your prior bank reconciliation to signify that these deposits have now been processed and recorded by the bank.

Coding System (Symbols) Used In Our Illustration

In order to illustrate what transactions appear in both records, I used a coding system instead of check marks to reference each transaction that appears on both records. I used letters of the alphabet to reference the checks and numbers to reference the deposits. This is just for illustrative purposes. For a business that writes many checks and/or handles many deposits you can easily see that this would be a hassle.

Ma jumped right in and started comparing the checks that appeared in her check book and that also appeared in the bank statement.

Small letters of the alphabet enclosed in parentheses for example (1) reference the checks that appear on both records and that we have completed Step 1 in reconciling our cash balance.

She next compared the deposits that appear in our check book and also that appear in the bank statement.

Numbers enclosed in parentheses for example (1) reference the deposits that appear on both records and that we have completed Step 2 in reconciling our cash balance.

Ma & Pa's Check and Bank Statement after comparing her transactions appear as follows:

Let's take a look at our check book and bank statement after we've performed the previously mentioned steps.

Ma & Pa's Checkbook for January xxxx

Date Reference Number Payee / Description Deposit Amount Deduction
Amount
Balance Reconciled
Jan 5, xxxx Deposit Slip 1 Opening Balance 25000   25000 (1)
Jan 6, xxxx Check 100 Nice Landlord   1000 24000 (a)
Jan 7, xxxx Check 101 Cheap Office Supply   1500 22500 (b)
Jan 8, xxxx Check 102 Old Store   5000 17500 (c)
Jan 8, xxxx Check 103 Smalltown Newspaper   800 16700 (d)
Jan 9, xxxx Check 104 Hotwire Electric   600 16100 (e)
Jan 10, xxxx Check 105 Fixit Right   400 15700  
Jan 11, xxxx Deposit Slip 2 Daily Sales and Collections Report 2000   17700 (2)
Jan 15, xxxx Check 106 Dirtyman Garbage   100 17600 (f)
Jan 6, xxxx Check 100 Nice Landlord   1000 16600  
Jan 16, xxxx Deposit Slip 3 Daily Sales and Collections Report 1000   18600 (3)
Jan 17, xxxx Check 107 Pretty Brochures   200 18400 (g)
Jan 20, xxxx Check 108 Old Store   600 17800 (h)   ?
Jan 20, xxxx Deposit Slip 4 Daily Sales and Collections Report 500   18300  
Jan 23, xxxx Check 110 Sturdy Shipping Crates   750 19050  
Jan 25, xxxx Check 111 Nice Landlord   1000 18050 (i)
Jan 26, xxxx Check 112 Fancy Wholesale Antiques   3000 15050 (j)
Jan 27, xxxx Check 113 Talktoyou Phones   1800 13250  
Jan 26, xxxx Deposit Slip 6 Daily Sales and Collections Report 800   14050 (4)
Jan 28, xxxx Check 114 Talkalot Service   200 13850  
Jan 28, xxxx Deposit Slip 7 Daily Sales and Collections Report 700   14550  
Jan 29, xxxx Check 115 Bean Counter Accounting   300 14250  
Jan 30, xxxx Deposit Slip 8 Daily Sales and Collections Report 2500   16750  
Jan 31, xxxx Deposit Slip 9 Daily Sales and Collections Report 1900   18650  

Ma & Pa's Bank Statement for January xxxx

Wehavemoney State Bank
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Ma and Pa's Antiques
Account Number: 1111111111
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Balance From Prior Statement 0
Deposits 43800
Disbursements  
Checks 19400
Bank Fees and Charges 85
Other Drafts & Charges 1000
Balance as of Jan 28, xxxxx 23315
 
Deposit Details:
Jan 5 25000 (1)
Jan 8 5000  
Jan 11 2000 (2)
Jan 14 2000  
Jan 17 1000 (3)
Jan 21 5000  
Jan 25 3000  
Jan 26 800 (4)
 
Total Deposits 43800
 
Disbursement Details:
Jan 8 100 1000 (a)
Jan 10 101 1500 (b)
Jan 10 ID 400  
Jan 11 102 5000 (c)
Jan 9 103 800 (d)
Jan 10 *104 600 (e)
Jan 11   CDP 75  
Jan 14   CCF 100  
Jan 19 NSF 500  
Jan 20 106 100 (f)
Jan 20 107 200 (g)
Jan 25 108 6000 (h)  ?
Jan 25 *109 200  
Jan 26 111 1000 (i)
Jan 28 112 3000 (j)
Jan 28 MSF 10  
 
Total Checks 19400
Total Bank Charges & Fees 85
Total Other Drafts & Charges 1000
 
Total Disbursements 20485

Abbreviations
NSF- Non Sufficient Funds Check - also known as a "bad check" -
CDP- Check/Deposit Ticket Printing Fees
CCF- Credit Card Fees - fees charged for processing credit card transactions
MSF- Monthly Service Charge
ID - Insurance Draft -preauthorized deduction

What are those transactions highlighted in yellow ? I highlighted them, in order to make them stand out. These are transactions that did not appear in both the check book and the bank statement. These are the transactions that we need to investigate and determine what we need to do with in order to reconcile our cash balance.

What we did just is kind of like matching up socks and putting them out of the way in a drawer. Many times you have some socks left that don't match. The unmatched socks are the socks we need to continue to look for. Likewise our unmatched cash transactions are the ones we need to investigate.

Let's make use of a couple of work sheets to help us investigate and handle these unmatched cash transactions. The unmatched cash transactions fall in to two categories:

  • Transactions In The Checkbook But Not In The Bank Statement
    In other words, we know something that the bank doesn't.
  • Transactions In The Bank Statement But Not In The Checkbook
    The bank knows something that we don't.

Worksheet 1
Transactions In The Checkbook But Not In The Bank Statement

Date Reference Payee / Description Deposit
Amount
Deduction
Amount
Explanation Adjustment Reference
Jan 6, xxxx Check 100 Nice Landlord   1000 Outstanding Check  
Jan 10, xxxx Check 105 Fixit Right   400 Outstanding Check  
Jan 20, xxxx Deposit Slip 4 Daily Sales and Collections Report 500      
Jan 23, xxxx Check 110 Sturdy Shipping Crates   750 Outstanding Check  
Jan 27, xxxx Check 113 Talktoyou Phones   1800 Outstanding Check  
Jan 28, xxxx Check 114 Talkalot Service   200 Outstanding Check  
Jan 28, xxxx Deposit Slip 7 Daily Sales and Collections Report 700      
Jan 29, xxxx Check 115 Bean Counter Accounting   300 Outstanding Check  
Jan 30, xxxx Deposit Slip 8 Daily Sales and Collections Report 2500      
Jan 31, xxxxx Deposit Slip 9 Daily Sales and Collections Report 1900      

OK, so good so far now what else do we need to do ?

  • Prepare a listing of your outstanding checks (checks that the bank has not yet processed and paid).
    Where do you think the information for this list comes from ? It's real simple, simply include all the checks (check number, date, payee and amount) from your check book or register that don't have a check mark or a ? (or the symbols or notations you use) beside them. This listing of checks is called your Outstanding Checks.
  • Prepare a listing of receipts / deposits (date and amount) recorded in your check book or cash register that have not been recorded in the bank statement. This is also quite simple. Simply list the deposits in your check book or register that don't have a check mark or a ? beside them (or your symbols or notations). This listing of deposits is called your Deposits In Transit.
  • Compare any other transactions listed in your check book or register with your bank statement and place a check mark (or your symbol or notation) beside the transaction that appears in your check book and a check mark (or your symbol or notation) beside the transaction that also appears on the bank statement if the reference and/or amounts are correct. If not, place a ? (or your symbol or notation) beside the transaction on the bank statement and a ? (or your symbol or notation) beside the the transaction in your check book or register.
  • What about those cash transactions checks, deposits, etc. marked with a ? (or your symbol or notation) ?
    These are errors that need to be investigated, explained, and corrected.
  • Review your bank statement for any other transactions that don't have a check mark or a ? (or your symbols or notations) beside them. These transactions represent transactions that have not been recorded in your check book or register.

    Examples of some transactions that you might encounter are:

    Deductions:

    • Bank Fees
    • Check and Deposit Ticket Printing Fees
    • Bank Drafts (Charges) for Insurance
    • Bank Drafts (Charges) for Note Payments
    • NSF (non-sufficient funds) or "bad checks.

    Deposits:

    • Credit Card Direct Deposits that we failed to record in our Check Book or Register
    • Bank Loans Deposited directly to our bank account
    • Interest Earned on Checking Account
  • Review your check book or register for any other transactions that don't have a check mark (or your symbol or notation) beside them. These transactions represent transactions that have not been recorded on your bank statement and that require further investigation.
  • Review your Listing Of Outstanding Checks and double check that the checks listed do not appear on the bank statement.

    Also review your Listing Of Deposits In Transit and double check that the deposits do not appear on the bank statement.

Based on our Checklist, Ma's next step is to prepare a listing of her outstanding checks. This listing of checks is called your Outstanding Checks. Most bank statements have a section on their form you can use to list your outstanding checks if you choose to do so.

Where do you think the information for this list comes from ? It's real simple, simply include all the checks (check number, date, payee and amount) from your check book or register that don't have a check mark or a ? (or the symbols or notations you use) beside them.

In our case, we went one step further and made a worksheet that included our cash transactions in our check book that didn't have a check mark (note we actually used symbols and notations) to use to help us identify our outstanding checks. All we had to do to prepare our Outstanding Checks List was list the checks in our worksheet. I even highlighted the checks in yellow to make it even easier. Notice this listing is only made up of checks and does not include any of the cash deposit transactions. Patience, we'll get to the cash deposits shortly.

The worksheet is not actually required, I just used it here to try to simplify what we were actually doing.

In summary, in order to determine your outstanding checks for a month all you need to do is list all the checks in your check book that don't have a check mark (or other notation you use) beside them.

Since we got fancy and made a worksheet, we determined our outstanding checks by just listing all the checks contained in our worksheet which represents cash transactions that don't have a check mark (or other notation) beside them.

You could have accomplished the same thing by listing all the check numbers highlighted in yellow (checks without a check mark or notation) in Ma & Pa's Check Book.

Instead of using the bank's form, where going to make our own worksheet for our Outstanding Checks.

What exactly are outstanding checks ?
When you write a check and either mail or give it to an individual or business that person or business either deposits the check in their own bank account or gets it cashed. Your bank does not know about this check until the check is sent to your bank and then deducted from your bank account. The check may clear (be processed and deducted from your bank account) the same day as it was written; but, more than likely the check won't clear until a couple of days later. In some cases, if the person or business holds on to the check and doesn't immediately either cash the check or deposit the check in their own bank account, your check may not clear for two weeks or longer. >p> In a nutshell, outstanding checks are checks that the bank has not yet processed and paid.

Ma and Pa's Outstanding Check List as of January 31, xxxx

Date Check Number Payee Amount
Jan 6, xxxx 100 Nice Landlord 1000
Jan 10, xxxx 105 Fixit Right 400
Jan 23, xxxx 110 Sturdy Shipping Crates 750
Jan 27, xxxx 113 Talktoyou Phones 1800
Jan 28, xxxx 114 Talkalot Service 200
Jan 29, xxxx 115 Bean Counter Accounting 300
       
Month Totals     4450

What's our next step ?

Prepare a listing of receipts / deposits (date and amount) recorded in your check book or cash register that have not been recorded in the bank statement. This is also quite simple. Simply list the deposits in your check book or register that don't have a check mark or a ? beside them (or your symbol or notation). This listing of deposits is called your Deposits In Transit.

Again, since we prepared a worksheet that includes these transactions, we'll use our worksheet to prepare our Deposits In Transit Listing.

Date Reference Payee / Description Deposit
Amount
Deduction
Amount
Explanation Adjustment Reference
Jan 10, xxxx Check 105 Fixit Right   400 Outstanding Check  
Jan 6, xxxx Check 100 Nice Landlord   1000 Outstanding Check  
Jan 20, xxxx Deposit Slip 4 Daily Sales and Collections Report 500   Deposit In Transit  
Jan 23, xxxx Check 110 Sturdy Shipping Crates   750 Outstanding Check  
Jan 27, xxxx Check 113 Talktoyou Phones   1800 Outstanding Check  
Jan 28, xxxx Check 114 Talkalot Service   200 Outstanding Check  
Jan 28, xxxx Deposit Slip 7 Daily Sales and Collections Report 700   Deposit In Transit  
Jan 29, xxxx Check 115 Bean Counter Accounting   300 Outstanding Check  
Jan 30, xxxx Deposit Slip 8 Daily Sales and Collections Report 2500   Deposit In Transit  
Jan 31, xxxxx Deposit Slip 9 Daily Sales and Collections Report 1900   Deposit In Transit  

The blue highlighted items in our worksheet represent our deposit cash transactions that have not yet been recorded by the bank. A deposit in transit is just a deposit that has not yet been processed by the bank and added to your bank balance.

Ma and Pa's Deposits In Transit as of January 31, xxxx

Date Reference Amount
Jan 20, xxxx Deposit Slip 4 500
Jan 28, xxxx Deposit Slip 7 700
Jan 30, xxxx Deposit Slip 8 2500
Jan 31, xxxx Deposit Slip 9 1900
Total   5600

Of course, we could have prepared our deposits in transit schedule directly from Ma's and Pop's Check Book without preparing a worksheet.

Our final steps in analyzing our cash transactions that appear in our check book but not in the bank's statement or that have not been recorded correctly are:

  • Compare any other transactions listed in your check book or register with your bank statement and place a check mark (or your symbol or notation) beside the transaction that appears in your check book and a check mark (or your symbol or notation) beside the transaction that also appears on the bank statement if the reference and/or amounts are correct. If the references or amounts are different, place a ? (or your symbol or notation) beside the transaction on the bank statement and an ? (or your symbol or notation) beside the the transaction in your check book or register.
  • What about those cash transactions checks, deposits, etc. marked with an ? (or your symbol or notation) ?
    These are errors that need to be investigated, explained, and corrected.

We had one cash transaction Check 108 that appeared in our check book that our bank recorded but had a different amount for the check. We noted this transaction in our check book and on our bank statement with an ?. Ma recorded the amount of check 108 in her check book for the erroneous amount of $600 instead of the actual amount of 6,000 that the check was written for.

We fixed this by making the correction in Ma's Check Book (see below). The amount of the correction was a deduction of an additional $5,400.
Note: The bank properly recorded the amount of check 108 as $6,000 so no correction will be needed on the bank statement.

Do you see how we arrived at the amount that we needed to deduct in order to correct our check book balance ?
Since the actual amount of the check-$6000 was greater than the amount that was recorded-$600, we need to deduct the difference of $5,400 ( 6000 - 600) to correct our check book. What if the actual amount of check 108 was $600 and we had recorded the check as $6,000 in our check book ? If that had been the case, we would have had to add an additional $5,400 to our check book balance.

Let's take a look at our check book after we've performed the previously mentioned steps.

Ma & Pa's Checkbook for January xxxx

Date Reference Number Payee / Description Deposit Amount Deduction
Amount
Balance Reconciled
Jan 5, xxxx Deposit Slip 1 Opening Balance 25000   25000 (1)
Jan 6, xxxx Check 100 Nice Landlord   1000 24000 (a)
Jan 7, xxxx Check 101 Cheap Office Supply   1500 22500 (b)
Jan 8, xxxx Check 102 Old Store   5000 17500 (c)
Jan 8, xxxx Check 103 Smalltown Newspaper   800 16700 (d)
Jan 9, xxxx Check 104 Hotwire Electric   600 16100 (e)
Jan 10, xxxx Check 105 Fixit Right   400 15700  
Jan 11, xxxx Deposit Slip 2 Daily Sales and Collections Report 2000   17700 (2)
Jan 15, xxxx Check 106 Dirtyman Garbage   100 17600 (f)
Jan 6, xxxx Check 100 Nice Landlord   1000 16600  
Jan 16, xxxx Deposit Slip 3 Daily Sales and Collections Report 1000   18600 (3)
Jan 17, xxxx Check 107 Pretty Brochures   200 18400 (g)
Jan 20, xxxx Check 108 Old Store   600 17800 (h)   ?
Jan 20, xxxx Deposit Slip 4 Daily Sales and Collections Report 500   18300  
Jan 23, xxxx Check 110 Sturdy Shipping Crates   750 19050  
Jan 25, xxxx Check 111 Nice Landlord   1000 18050 (i)
Jan 26, xxxx Check 112 Fancy Wholesale Antiques   3000 15050 (j)
Jan 27, xxxx Check 113 Talktoyou Phones   1800 13250  
Jan 26, xxxx Deposit Slip 6 Daily Sales and Collections Report 800   14050 (4)
Jan 28, xxxx Check 114 Talkalot Service   200 13850  
Jan 28, xxxx Deposit Slip 7 Daily Sales and Collections Report 700   14550  
Jan 29, xxxx Check 115 Bean Counter Accounting   300 14250  
Jan 30, xxxx Deposit Slip 8 Daily Sales and Collections Report 2500   16750  
Jan 31, xxxx Deposit Slip 9 Daily Sales and Collections Report 1900   18650  
Jan 31, xxxx Check 108 Adjust Check 108
Recorded wrong check amount
Check's actual amount was 6000
and the amount was
erroneously recorded as 600
  5400 13250 (h)

It looks like we've finished with our review of our cash transactions that appear in our check book but do not appear in our bank statement. Our check transactions were highlighted in yellow and our deposit transactions were highlighted in blue in the previous table. We also fixed our error in our check book where we recorded check 108's amount as $600 instead of the check's actual amount of $6,000.

Our Final Step

  • Review your bank statement for any other transactions that don't have a check mark or an X (or your symbol or notation) beside them. These transactions represent transactions that have not been recorded in your check book or register.

    Examples of some transactions that you might encounter are:

    Deductions:

    • Bank Fees
    • Check and Deposit Ticket Printing Fees
    • Bank Drafts (Charges) for Insurance
    • Bank Drafts (Charges) for Note Payments
    • NSF (non-sufficient funds) or "bad checks.

    Deposits:

    • Credit Card Direct Deposits that we failed to record in our Check Book or Register
    • Bank Loans Deposited directly to our bank account
    • Interest Earned on Checking Account
  • Review your check book or register for any other transactions that don't have a check mark (or your symbol or notation) beside them. These transactions represent transactions that have not been recorded on your bank statement.
    • Receipts not deposited in the bank

Ma & Pa's Bank Statement for January xxxx

Wehavemoney State Bank
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Ma and Pa's Antiques
Account Number: 1111111111
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Balance From Prior Statement 0
Deposits 43800
Disbursements  
Checks 19400
Bank Fees and Charges 85
Other Drafts & Charges 1000
Balance as of Jan 28, xxxxx 23315
 
Deposit Details:
Jan 5 25000 (1)
Jan 8 5000  
Jan 11 2000 (2)
Jan 14 2000  
Jan 17 1000 (3)
Jan 21 5000  
Jan 25 3000  
Jan 26 800 (4)
 
Total Deposits 43800
 
Disbursement Details:
Jan 8 100 1000 (a)
Jan 10 101 1500 (b)
Jan 10 ID 400  
Jan 11 102 5000 (c)
Jan 9 103 800 (d)
Jan 10 *104 600 (e)
Jan 11   CDP 75  
Jan 14   CCF 100  
Jan 19 NSF 500  
Jan 20 106 100 (f)
Jan 20 107 200 (g)
Jan 25 108 6000 (h)  ?
Jan 25 *109 200  
Jan 26 111 1000 (i)
Jan 28 112 3000 (j)
Jan 28 MSF 10  
 
Total Checks 19400
Total Bank Charges & Fees 85
Total Other Drafts & Charges 1000
 
Total Disbursements 20485

Abbreviations
NSF- Non Sufficient Funds Check - also known as a "bad check" -
CDP- Check/Deposit Ticket Printing Fees
CCF- Credit Card Fees - fees charged for processing credit card transactions
MSF- Monthly Service Charge
ID - Insurance Draft -preauthorized deduction

Now, it's time to continue our analysis and review of our bank statement. If you recall, we have already marked all the transactions that appear on the Bank Statement and also in Ma and Pa's Check Book. Our final analysis is to analyze the cash transactions that are not marked on the bank statement. These cash transactions represent transactions that have not been recorded in Ma and Pa's check book. We're going to use Worksheet 2 to analyze these cash transactions.

Worksheet 2
Transactions In The Bank Statement But Not In The Check Book

Date Reference Payee / Description Deposit
Amount
Deduction
Amount
Explanation Adjustment Reference
Jan 8, xxxx     5000      
Jan 14, xxxx     2000      
Jan 21, xxxx     5000      
Jan 25, xxxx     3000      
Jan 10, xxxx ID     400    
Jan 11, xxxx CDP     75    
Jan 14, xxxx CCF     100    
Jan 19, xxxx NSF     500    
Jan 25, xxxx Check 109     200    
Jan 28, xxxx MSF     10    

The blue highlighted transactions denote Deposit transactions and the yellow highlighted transactions denote Disbursement types of transactions. We know these transactions have not been recorded in our check book because they didn't have a check mark or other notation beside them on the bank statement.

Let's take care of the easy transactions first. Let's refer to the bottom portion of our above bank statement that lists the transaction abbreviations used by the bank.

Abbreviations Used
NSF- Non Sufficient Funds Check - also known as a "bad check" -
CDP- Check/Deposit Ticket Printing Fees
CCF- Credit Card Fees - fees charged for processing credit card transactions
MSF- Monthly Service Charge
ID - Insurance Draft -preauthorized deduction

While we're here let's discuss these type of transactions and make sure that you understand what they are.
NSF stands for Non Sufficient Funds and is an often used abbreviation used to identify this type of transaction. This type of transaction occurs after a customer or anyone for that matter writes and gives you a check that when later presented to their (payer's) bank for payment doesn't have the funds (cash) in their account to cover the amount of the check. The check is then returned to your bank deducted from your statement and mailed to you usually along with what is called a bank debit memo. Why is it deducted ? Because the deposit that contained the check was originally added to your bank balance and presumed to be good; therefore, since the check later is determined to be "no good", it needs to be deducted from your bank balance.

If you're really on the ball, you'll adjust your check book at the time you receive this notice and bad check from the bank.

CDP are the fees your bank charge you for printing your checks and deposit slips.

CCF are the fees that your credit card processing company charges you for handling your credit card transactions.

MSF is the charge that your bank charges you for maintaining and recording your banking transactions. Some banks waive this charge if you maintain a certain average balance in your checking account.

ID is a bank draft, in this case, for an insurance payment directly deducted from your bank account and transferred to the account of your insurance agent. Bank Drafts can be used for a variety of payments such as phone bills

If you're really on the ball, you'll deduct these transactions when you receive notification from the bank that these deductions have occurred.

Note: The abbreviations used above were just for our illustration and the actually abbreviations and codes used by your bank are probably different.

Did Ma and Pa deduct these transactions from their check book when the deductions actually occurred ? No ! How did I know this ? If they had, the deductions for these cash transactions would have been checked off in the check book and also checked off in the bank statement when we compared the two records for the transactions that were listed in both and would not have been included in our Worksheet 2.

Since Ma & Pa didn't already deduct these transaction when they occurred, we need to deduct them now.

Worksheet 2
Transactions In The Bank Statement But Not In The Check Book
With These Transactions Adjusted

Date Reference Payee / Description Deposit
Amount
Deduction
Amount
Explanation Adjustment Reference
Jan 8, xxxx     5000      
Jan 14, xxxx     2000      
Jan 21, xxxx     5000      
Jan 25, xxxx     3000      
Jan 10, xxxx ID     400 Insurance Draft  
Jan 11, xxxx CDP     75 Check & Deposit Slip
Printing Fees
 
Jan 14, xxxx CCF     100 Credit Card
Processing Fees
 
Jan 19, xxxx NSF     500 Non Sufficient
Funds Check
 
Jan 25, xxxx Check 109     200    
Jan 28, xxxx MSF     10 Monthly Bank
Statement Charge
 

Ma & Pa's Checkbook for January xxxx
With These Transactions Adjusted

Date Reference Number Payee / Description Deposit Amount Deduction
Amount
Balance Reconciled
Jan 5, xxxx Deposit Slip 1 Opening Balance 25000   25000 (1)
Jan 6, xxxx Check 100 Nice Landlord   1000 24000 (a)
Jan 7, xxxx Check 101 Cheap Office Supply   1500 22500 (b)
Jan 8, xxxx Check 102 Old Store   5000 17500 (c)
Jan 8, xxxx Check 103 Smalltown Newspaper   800 16700 (d)
Jan 9, xxxx Check 104 Hotwire Electric   600 16100 (e)
Jan 10, xxxx Check 105 Fixit Right   400 15700  
Jan 11, xxxx Deposit Slip 2 Daily Sales and Collections Report 2000   17700 (2)
Jan 15, xxxx Check 106 Dirtyman Garbage   100 17600 (f)
Jan 6, xxxx Check 100 Nice Landlord   1000 16600  
Jan 16, xxxx Deposit Slip 3 Daily Sales and Collections Report 1000   18600 (3)
Jan 17, xxxx Check 107 Pretty Brochures   200 18400 (g)
Jan 20, xxxx Check 108 Old Store   600 17800 (h)   ?
Jan 20, xxxx Deposit Slip 4 Daily Sales and Collections Report 500   18300  
Jan 23, xxxx Check 110 Sturdy Shipping Crates   750 19050  
Jan 25, xxxx Check 111 Nice Landlord   1000 18050 (i)
Jan 26, xxxx Check 112 Fancy Wholesale Antiques   3000 15050 (j)
Jan 27, xxxx Check 113 Talktoyou Phones   1800 13250  
Jan 26, xxxx Deposit Slip 6 Daily Sales and Collections Report 800   14050 (4)
Jan 28, xxxx Check 114 Talkalot Service   200 13850  
Jan 28, xxxx Deposit Slip 7 Daily Sales and Collections Report 700   14550  
Jan 29, xxxx Check 115 Bean Counter Accounting   300 14250  
Jan 30, xxxx Deposit Slip 8 Daily Sales and Collections Report 2500   16750  
Jan 31, xxxx Deposit Slip 9 Daily Sales and Collections Report 1900   18650  
Jan 31, xxxx Check 108 Adjust Check 108
Recorded wrong check amount
Check's actual amount was 6000
and the amount was
erroneously recorded as 600
  5400 13250 (h)
Jan 10, xxxx ID Record Insurance Draft   400 12850 (k)
Jan 11, xxxx CDP Record Check and Deposit Slip Printing Fees   75 12775 (l)
Jan 14, xxxx CCF Record Credit Card Processing Fees   100 12675 (m)
Jan 19, xxxx NSF Record Check 1083 from
our customer Nogood Credit
that was returned as a "bad check"
  500 12175 (n)
Jan 11, xxxx MSF Record Monthly Statement Fee Charged By Bank   10 12165 (o)

Ma & Pa's Bank Statement for January xxxx
With These Transactions Adjusted

Wehavemoney State Bank
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Ma and Pa's Antiques
Account Number: 1111111111
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Balance From Prior Statement 0
Deposits 43800
Disbursements  
Checks 19400
Bank Fees and Charges 85
Other Drafts & Charges 1000
Balance as of Jan 28, xxxxx 23315
 
Deposit Details:
Jan 5 25000 (1)
Jan 8 5000  
Jan 11 2000 (2)
Jan 14 2000  
Jan 17 1000 (3)
Jan 21 5000  
Jan 25 3000  
Jan 26 800 (4)
 
Total Deposits 43800
 
Disbursement Details:
Jan 8 100 1000 (a)
Jan 10 101 1500 (b)
Jan 10 ID 400 (k)
Jan 11 102 5000 (c)
Jan 9 103 800 (d)
Jan 10 *104 600 (e)
Jan 11   CDP 75 (l)
Jan 14   CCF 100 (m)
Jan 19 NSF 500 (n)
Jan 20 106 100 (f)
Jan 20 107 200 (g)
Jan 25 108 6000 (h)  ?
Jan 25 *109 200  
Jan 26 111 1000 (i)
Jan 28 112 3000 (j)
Jan 28 MSF 10 (o)
 
Total Checks 19400
Total Bank Charges & Fees 85
Total Other Drafts & Charges 1000
 
Total Disbursements 20485

Abbreviations
NSF- Non Sufficient Funds Check - also known as a "bad check" -
CDP- Check/Deposit Ticket Printing Fees
CCF- Credit Card Fees - fees charged for processing credit card transactions
MSF- Monthly Service Charge
ID - Insurance Draft -preauthorized deduction

Worksheet 2
Transactions In The Bank Statement But Not In The Check Book
With These Transactions Adjusted

Date Reference Payee / Description Deposit
Amount
Deduction
Amount
Explanation Adjustment Reference
Jan 8, xxxx     5000      
Jan 14, xxxx     2000      
Jan 21, xxxx     5000      
Jan 25, xxxx     3000      
Jan 10, xxxx ID     400 Insurance Draft  
Jan 11, xxxx CDP     75 Check & Deposit Slip
Printing Fees
 
Jan 14, xxxx CCF     100 Credit Card
Processing Fees
 
Jan 19, xxxx NSF     500 Non Sufficient
Funds Check
 
Jan 25, xxxx Check 109     200    
Jan 28, xxxx MSF     10 Monthly Bank
Statement Charge
 

Let's take care of that last deduction in Worksheet 2 that we haven't yet analyzed and adjusted. See that yellow highlighted transaction with No Explanation. That's what we're going to take care of right now,

Our last deduction transaction to analyze and adjust is Check 109. Why does check 109 appear on the bank statement and not in the check book ? There's a real simple answer to this question. Either Ma or Pa forgot or overlooked this check and failed to record it in their check book. Do you believe me ? If not, refer to Ma and Pa's check book and see if you can find where Check 109 was entered. You can't can you ?

OK, so what do we need to do ? All we need to do is record the check now that we know we overlooked it and didn't.

Let's see what our Corrected Check Book looks like now after all the Deductions That Appear On The Bank Statement and Not In The Checkbook have been properly handled.

Ma & Pa's Checkbook for January xxxx
With All The Deduction Transactions Adjusted

Date Reference Number Payee / Description Deposit Amount Deduction
Amount
Balance Reconciled
Jan 5, xxxx Deposit Slip 1 Opening Balance 25000   25000 (1)
Jan 6, xxxx Check 100 Nice Landlord   1000 24000 (a)
Jan 7, xxxx Check 101 Cheap Office Supply   1500 22500 (b)
Jan 8, xxxx Check 102 Old Store   5000 17500 (c)
Jan 8, xxxx Check 103 Smalltown Newspaper   800 16700 (d)
Jan 9, xxxx Check 104 Hotwire Electric   600 16100 (e)
Jan 10, xxxx Check 105 Fixit Right   400 15700  
Jan 11, xxxx Deposit Slip 2 Daily Sales and Collections Report 2000   17700 (2)
Jan 15, xxxx Check 106 Dirtyman Garbage   100 17600 (f)
Jan 6, xxxx Check 100 Nice Landlord   1000 16600  
Jan 16, xxxx Deposit Slip 3 Daily Sales and Collections Report 1000   18600 (3)
Jan 17, xxxx Check 107 Pretty Brochures   200 18400 (g)
Jan 20, xxxx Check 108 Old Store   600 17800 (h)   ?
Jan 20, xxxx Deposit Slip 4 Daily Sales and Collections Report 500   18300  
Jan 23, xxxx Check 110 Sturdy Shipping Crates   750 19050  
Jan 25, xxxx Check 111 Nice Landlord   1000 18050 (i)
Jan 26, xxxx Check 112 Fancy Wholesale Antiques   3000 15050 (j)
Jan 27, xxxx Check 113 Talktoyou Phones   1800 13250  
Jan 26, xxxx Deposit Slip 6 Daily Sales and Collections Report 800   14050 (4)
Jan 28, xxxx Check 114 Talkalot Service   200 13850  
Jan 28, xxxx Deposit Slip 7 Daily Sales and Collections Report 700   14550  
Jan 29, xxxx Check 115 Bean Counter Accounting   300 14250  
Jan 30, xxxx Deposit Slip 8 Daily Sales and Collections Report 2500   16750  
Jan 31, xxxx Deposit Slip 9 Daily Sales and Collections Report 1900   18650  
Jan 31, xxxx Check 108 Adjust Check 108
Recorded wrong check amount
Check's actual amount was 6000
and the amount was
erroneously recorded as 600
  5400 13250 (h)
Jan 10, xxxx ID Record Insurance Draft   400 12850 (k)
Jan 11, xxxx CDP Record Check and Deposit Slip Printing Fees   75 12775 (l)
Jan 14, xxxx CCF Record Credit Card Processing Fees   100 12675 (m)
Jan 19, xxxx NSF Record Check 1083 from
our customer Nogood Credit
that was returned as a "bad check"
  500 12175 (n)
Jan 11, xxxx MSF Record Monthly Statement Fee Charged By Bank   10 12165 (o)
Jan 21, xxxx Check 109 Check 109 Not Recorded In Check Book   200 11965 (p)

Ma & Pa's Bank Statement for January xxxx
With All The Deductions Adjusted

Wehavemoney State Bank
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Ma and Pa's Antiques
Account Number: 1111111111
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Balance From Prior Statement 0
Deposits 43800
Disbursements  
Checks 19400
Bank Fees and Charges 85
Other Drafts & Charges 1000
Balance as of Jan 28, xxxxx 23315
 
Deposit Details:
Jan 5 25000 (1)
Jan 8 5000  
Jan 11 2000 (2)
Jan 14 2000  
Jan 17 1000 (3)
Jan 21 5000  
Jan 25 3000  
Jan 26 800 (4)
 
Total Deposits 43800
 
Disbursement Details:
Jan 8 100 1000 (a)
Jan 10 101 1500 (b)
Jan 10 ID 400 (k)
Jan 11 102 5000 (c)
Jan 9 103 800 (d)
Jan 10 *104 600 (e)
Jan 11   CDP 75 (l)
Jan 14   CCF 100 (m)
Jan 19 NSF 500 (n)
Jan 20 106 100 (f)
Jan 20 107 200 (g)
Jan 25 108 6000 (h)  ?
Jan 25 *109 200 (p)
Jan 26 111 1000 (i)
Jan 28 112 3000 (j)
Jan 28 MSF 10 (o)
 
Total Checks 19400
Total Bank Charges & Fees 85
Total Other Drafts & Charges 1000
 
Total Disbursements 20485

Abbreviations
NSF- Non Sufficient Funds Check - also known as a "bad check" -
CDP- Check/Deposit Ticket Printing Fees
CCF- Credit Card Fees - fees charged for processing credit card transactions
MSF- Monthly Service Charge
ID - Insurance Draft -preauthorized deduction

Worksheet 2
Transactions In The Bank Statement But Not In The Check Book
With All The Deduction Transactions Adjusted

Date Reference Payee / Description Deposit
Amount
Deduction
Amount
Explanation Adjustment Reference
Jan 8, xxxx     5000      
Jan 14, xxxx     2000      
Jan 21, xxxx     5000      
Jan 25, xxxx     3000      
Jan 10, xxxx ID     400 Insurance Draft  
Jan 11, xxxx CDP     75 Check & Deposit Slip
Printing Fees
 
Jan 14, xxxx CCF     100 Credit Card
Processing Fees
 
Jan 19, xxxx NSF     500 Non Sufficient
Funds Check
 
Jan 25, xxxx Check 109     200 Check Not Recorded
In Checkbook
 
Jan 28, xxxx MSF     10 Monthly Bank
Statement Charge
 

Boy, wer'e moving right along aren't we. All we have left to do, is analyze the Deposits on the Bank Statement that we don't have entered in our Check Book. That's those blue highlighted transactions above. All the yellow highlighted disbursement (deduction) transactions we've now investigated and handled and have an explanation in the explanation column. Only four more transaction so let's get them done.

Ma was wondering where she could find some some help in order to help analyze and determine what the deposits are that are on the bank statement and that have not been recorded in the check book. Since many times (not always) two heads are better than one - she asked Pa ? Pa rubbed his chin a minute and told Ma maybe getting out the actual deposit slips and the deposit book that has a copy of the deposit slips (duplicate slips) in it might help. He also told Ma that maybe she should open some of the correspondence from the bank that she hadn't opened and looked at and get their copies of their Daily Sales and Collection Reports. He also remembered that they also had a statement that they received from the company that processes their credit cards. By golly, I think ole Pa came up with a pretty good idea. If I wasn't a male, I would have reversed it and had Ma come up with the good idea.

Our Analysis of The Bank Deposits

After opening and reviewing the correspondence received from the bank, the statement that they received from their credit card processing company, and rounding up her deposit slips and deposit book, Ma felt like she was ready to tackle that last part of the bank reconciliation. So here we go.

(1) The first deposit in Worksheet 2 is for $5,000 processed by the bank on Jan 8, xxxx. Ma remembered that she ran across a memo from the bank when she was reviewing the correspondence that she had received from her bank. Ma dug it out and sure enough the bank had deposited a loan for $5,000 on January 8, xxxx that they had approved for Ma & Pa to purchase reconditioning equipment. Ma knew right away that she had forgot and not recorded this in her check book.

(2) The second deposit listed dated January 14, xxxx for $2,000 Ma found when reviewing her statement from her credit card processing company. Since credit card charges are directly deposited into Ma & Pa's bank account, no deposit slip was prepared by Ma or Pa for the credit card sales that they made on Jan 14. Ma and Pa did however record these credit cards sales in their Daily Sales and Collections Report. Ma and Pa discussed how it might be easier to keep up with these type of deposits. They decided from now on to prepare a "memo only" deposit slip so that they would have a record of the deposit in their deposit book.

(3) Ma and Pa after searching thru their records were initially unable to find what the third deposit for $5,000 dated January 21, xxxx was for. They decided that they would make a note and do some more research later.

(4) The last deposit in Worksheet 2 dated January 25, xxxx Mom located as Deposit Slip 5 in her Deposit Book. Ma doubled checked the deposits entered in her check book and sure enough Ma & Pa forgot to enter this deposit in their check book. Let's double check Ma and take a moment to look at her check book. Sure enough Deposit Slip 4 was properly recorded; however, the next deposit recorded in the check book was Deposit Slip 6. Deposit Slip 5 was overlooked and not recorded.

Worksheet 2
Transactions In The Bank Statement But Not In The Check Book
With All The Deduction Transactions Adjusted
and Most of The Deposits

Date Reference Payee / Description Deposit
Amount
Deduction
Amount
Explanation Adjustment Reference
Jan 8, xxxx     5000   Bank Note - Loan
Direct Deposit By Bank
 
Jan 14, xxxx     2000   Credit Card Sales
Direct Deposit
 
Jan 21, xxxx     5000   Unknown  
Jan 25, xxxx     3000   Deposit Slip 5  
Jan 10, xxxx ID     400 Insurance Draft  
Jan 11, xxxx CDP     75 Check & Deposit Slip
Printing Fees
 
Jan 14, xxxx CCF     100 Credit Card
Processing Fees
 
Jan 19, xxxx NSF     500 Non Sufficient
Funds Check
 
Jan 25, xxxx Check 109     200 Check Not Recorded
In Checkbook
 
Jan 28, xxxx MSF     10 Monthly Bank
Statement Charge
 

We've investigated and adjusted all our deduction and all of our deposit transactions except for the deposit made on January 21, xxxx for $5,000 which we noted that this transaction required more investigation.

Let's take a look at Ma and Pa's Bank Statement and Checkbook and see what these records look like now.

Ma & Pa's Bank Statement for January xxxx
With All The Deductions Adjusted
and Most Of The Deposit Transactions Adjusted

Wehavemoney State Bank
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Ma and Pa's Antiques
Account Number: 1111111111
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Balance From Prior Statement 0
Deposits 43800
Disbursements  
Checks 19400
Bank Fees and Charges 85
Other Drafts & Charges 1000
Balance as of Jan 28, xxxxx 23315
 
Deposit Details:
Jan 5 25000 (1)
Jan 8 5000 (5)
Jan 11 2000 (2)
Jan 14 2000 (6)
Jan 17 1000 (3)
Jan 21 5000  
Jan 25 3000 (7)
Jan 26 800 (4)
 
Total Deposits 43800
 
Disbursement Details:
Jan 8 100 1000 (a)
Jan 10 101 1500 (b)
Jan 10 ID 400 (k)
Jan 11 102 5000 (c)
Jan 9 103 800 (d)
Jan 10 *104 600 (e)
Jan 11   CDP 75 (l)
Jan 14   CCF 100 (m)
Jan 19 NSF 500 (n)
Jan 20 106 100 (f)
Jan 20 107 200 (g)
Jan 25 108 6000 (h)  ?
Jan 25 *109 200 (p)
Jan 26 111 1000 (I)
Jan 28 112 3000 (j)
Jan 28 MSF 10 (o)
 
Total Checks 19400
Total Bank Charges & Fees 85
Total Other Drafts & Charges 1000
 
Total Disbursements 20485

Abbreviations
NSF- Non Sufficient Funds Check - also known as a "bad check" -
CDP- Check/Deposit Ticket Printing Fees
CCF- Credit Card Fees - fees charged for processing credit card transactions
MSF- Monthly Service Charge
ID - Insurance Draft -preauthorized deduction

Ma & Pa's Checkbook for January xxxx
With All The Deduction Transactions Adjusted
and Most Of The Deposit Transactions Adjusted

Date Reference Number Payee / Description Deposit Amount Deduction
Amount
Balance Reconciled
Jan 5, xxxx Deposit Slip 1 Opening Balance 25000   25000 (1)
Jan 6, xxxx Check 100 Nice Landlord   1000 24000 (a)
Jan 7, xxxx Check 101 Cheap Office Supply   1500 22500 (b)
Jan 8, xxxx Check 102 Old Store   5000 17500 (c)
Jan 8, xxxx Check 103 Smalltown Newspaper   800 16700 (d)
Jan 9, xxxx Check 104 Hotwire Electric   600 16100 (e)
Jan 10, xxxx Check 105 Fixit Right   400 15700  
Jan 11, xxxx Deposit Slip 2 Daily Sales and Collections Report 2000   17700 (2)
Jan 15, xxxx Check 106 Dirtyman Garbage   100 17600 (f)
Jan 6, xxxx Check 100 Nice Landlord   1000 16600  
Jan 16, xxxx Deposit Slip 3 Daily Sales and Collections Report 1000   18600 (3)
Jan 17, xxxx Check 107 Pretty Brochures   200 18400 (g)
Jan 20, xxxx Check 108 Old Store   600 17800 (h)   ?
Jan 20, xxxx Deposit Slip 4 Daily Sales and Collections Report 500   18300  
Jan 23, xxxx Check 110 Sturdy Shipping Crates   750 19050  
Jan 25, xxxx Check 111 Nice Landlord   1000 18050 (i)
Jan 26, xxxx Check 112 Fancy Wholesale Antiques   3000 15050 (j)
Jan 27, xxxx Check 113 Talktoyou Phones   1800 13250  
Jan 26, xxxx Deposit Slip 6 Daily Sales and Collections Report 800   14050 (4)
Jan 28, xxxx Check 114 Talkalot Service   200 13850  
Jan 28, xxxx Deposit Slip 7 Daily Sales and Collections Report 700   14550  
Jan 29, xxxx Check 115 Bean Counter Accounting   300 14250  
Jan 30, xxxx Deposit Slip 8 Daily Sales and Collections Report 2500   16750  
Jan 31, xxxx Deposit Slip 9 Daily Sales and Collections Report 1900   18650  
Jan 31, xxxx Check 108 Adjust Check 108
Recorded wrong check amount
Check's actual amount was 6000
and the amount was
erroneously recorded as 600
  5400 13250 (h)
Jan 10, xxxx ID Record Insurance Draft   400 12850 (k)
Jan 11, xxxx CDP Record Check and Deposit Slip Printing Fees   75 12775 (l)
Jan 14, xxxx CCF Record Credit Card Processing Fees   100 12675 (m)
Jan 19, xxxx NSF Record Check 1083 from
our customer Nogood Credit
that was returned as a "bad check"
  500 12175 (n)
Jan 11, xxxx MSF Record Monthly Statement Fee Charged By Bank   10 12165 (o)
Jan 21, xxxx Check 109 Check 109 Not Recorded In Check Book   200 11965 (p)
Jan 8, xxxx Bank Loan Bank Loan Directly Deposited
In Bank Account Not Recorded
5000   16965 (5)
Jan 14, xxxx Credit Card Sales Credit Card Sales Directly Deposited
Into Bank Account Not Recorded
2000   18965 (6)
Jan 25, xxxx Deposit Slip 5 Deposit Slip 5 Not Recorded In Check Book 3000   21965 (7)

Most of the time, you wait and make your corrections to your check book all at one time from the information contained in your Bank Reconciliation. I chose to make the corrections in the check book as we went along and discovered them. I'll illustrate what I mean and a little later.

Since we chose to make our corrections in our check book as we found them we'll use our corrected balance for the balance used in our Bank Reconciliation. Now, that we have a corrected check book let's do a Preliminary Reconciliation.

Preliminary Bank Reconciliation

Balance Per Bank 23315 Our Adjusted Balance
Per Check Book
21965
Plus:      
Deposits In Transit 5600 Unknown Deposit Jan 21 5000
Less:      
Outstanding Checks 4450    
       
Adjusted Bank Balance 24465 Adjusted Book Balance 26965

Ma and Pa's Outstanding Check List as of January 31, xxxx

Date Check Number Payee Amount
Jan 6, xxxx 100 Nice Landlord 1000
Jan 10, xxxx 105 Fixit Right 400
Jan 23, xxxx 110 Sturdy Shipping Crates 750
Jan 27, xxxx 113 Talktoyou Phones 1800
Jan 28, xxxx 114 Talkalot Service 200
Jan 29, xxxx 115 Bean Counter Accounting 300
       
Month Totals     4450

Ma and Pa's Deposits In Transit as of January 31, xxxx

Date Reference Amount
Jan 20, xxxx Deposit Slip 4 500
Jan 28, xxxx Deposit Slip 7 700
Jan 30, xxxx Deposit Slip 8 2500
Jan 31, xxxx Deposit Slip 9 1900
Total   5600
Darn ! The two balances are supposed to agree. What's wrong ? The Adjusted Book Balance is $26,965 and the Adjusted Bank Balance is only $24,465. That's a difference of $2,500. Do we need to bring in our handsome, debonair, and smart accountant Dave Marshall (that's me - I wish) from Bean Counter Accounting to help us ? Not quite yet. There are still a few things that we need to check out.

The next thing we need to do which we haven't already done is to look for addition and subtraction errors in Ma & Pa's Check Book. If you're maintaining your check book using a computer and software you would probably be wasting your time if you checked the additions and subtractions made; however, if you're doing it manually you definitely need to do this. We probably should have done this as one of our very first steps. Do you think we also need to check the additions and subtractions on our Bank Statement ? Most if not all banks use a computer and software so here again you'd probably be wasting your time.

Since Ma & Pa manually maintained their check book we'll check and see how they did. While you could start with the beginning balance and add each deposit and subtract each check and other charge , I like to do it in a little easier manner. I run an adding machine tape of all the additions (deposits) and another tape of all the deductions (checks and other charges). I then simply take the beginning balance and add the the total additions and subtract the total deductions to get my ending check balance. If the balance agrees with the ending check book balance I saved myself a little time in checking each addition, subtraction, and calculated balance in the check book. If the balance doesn't agree I'll do this then.

All we need to do is add the amounts in the deposit column of Ma & Pa's Check Book and likewise add the amounts in the deductions column.

If my adding machine tape is correct, my total for additions to Ma & Pa's beginning balance is $44,400.

Likewise the total of my deductions from my adding machine tape is $24,935.

Beginning Balance 0
Additions 44400
Deductions 24935
Ending Balance 19,465

The balance that we calculated is $19,465; however, Ma & Pa's Check Book shows a balance of $21,965 or a difference of $2500. Looks to me that Ma or Pa made some addition and subtraction errors. How do we find out where they occurred ? Unfortunately we need to run an adding machine tape and add each addition and subtract each deduction and compare this to each calculated balance in the check book. If you've got the time and an adding machine, this would be a good exercise for you to perform and check me out.

  1. By doing this, I found the following addition, subtraction, and calculated balance errors in Ma & Pa's Check Book.
  2. Made an addition error when we added the amount from Deposit Slip 3 for the amount of $1000 dated January 16, xxxx to our check book balance.
  3. Added Check 110 dated January 23, xxxx for the amount of $750 to our check book balance instead of subtracting.

Ma & Pa's Checkbook for January xxxx
With All The Deduction Transactions Adjusted
and Most Of The Deposit Transactions Adjusted
and All The Addition and Subtraction Errors Corrected

Date Reference Number Payee / Description Deposit Amount Deduction
Amount
Balance Reconciled
Jan 5, xxxx Deposit Slip 1 Opening Balance 25000   25000 (1)
Jan 6, xxxx Check 100 Nice Landlord   1000 24000 (a)
Jan 7, xxxx Check 101 Cheap Office Supply   1500 22500 (b)
Jan 8, xxxx Check 102 Old Store   5000 17500 (c)
Jan 8, xxxx Check 103 Smalltown Newspaper   800 16700 (d)
Jan 9, xxxx Check 104 Hotwire Electric   600 16100 (e)
Jan 10, xxxx Check 105 Fixit Right   400 15700  
Jan 11, xxxx Deposit Slip 2 Daily Sales and Collections Report 2000   17700 (2)
Jan 15, xxxx Check 106 Dirtyman Garbage   100 17600 (f)
Jan 6, xxxx Check 100 Nice Landlord   1000 16600  
Jan 16, xxxx Deposit Slip 3 Daily Sales and Collections Report 1000   18600 (3)
Jan 17, xxxx Check 107 Pretty Brochures   200 18400 (g)
Jan 20, xxxx Check 108 Old Store   600 17800 (h)   ?
Jan 20, xxxx Deposit Slip 4 Daily Sales and Collections Report 500   18300  
Jan 23, xxxx Check 110 Sturdy Shipping Crates   750 19050  
Jan 25, xxxx Check 111 Nice Landlord   1000 18050 (i)
Jan 26, xxxx Check 112 Fancy Wholesale Antiques   3000 15050 (j)
Jan 27, xxxx Check 113 Talktoyou Phones   1800 13250  
Jan 26, xxxx Deposit Slip 6 Daily Sales and Collections Report 800   14050 (4)
Jan 28, xxxx Check 114 Talkalot Service   200 13850  
Jan 28, xxxx Deposit Slip 7 Daily Sales and Collections Report 700   14550  
Jan 29, xxxx Check 115 Bean Counter Accounting   300 14250  
Jan 30, xxxx Deposit Slip 8 Daily Sales and Collections Report 2500   16750  
Jan 31, xxxx Deposit Slip 9 Daily Sales and Collections Report 1900   18650  
Jan 31, xxxx Check 108 Adjust Check 108
Recorded wrong check amount
Check's actual amount was 6000
and the amount was
erroneously recorded as 600
  5400 13250 (h)
Jan 10, xxxx ID Record Insurance Draft   400 12850 (k)
Jan 11, xxxx CDP Record Check and Deposit Slip Printing Fees   75 12775 (l)
Jan 14, xxxx CCF Record Credit Card Processing Fees   100 12675 (m)
Jan 19, xxxx NSF Record Check 1083 from
our customer Nogood Credit
that was returned as a "bad check"
  500 12175 (n)
Jan 11, xxxx MSF Record Monthly Statement Fee Charged By Bank   10 12165 (o)
Jan 21, xxxx Check 109 Check 109 Not Recorded In Check Book   200 11965 (p)
Jan 8, xxxx Bank Loan Bank Loan Directly Deposited
In Bank Account Not Recorded
5000   16965 (5)
Jan 14, xxxx Credit Card Sales Credit Card Sales Directly Deposited
Into Bank Account Not Recorded
2000   18965 (6)
Jan 25, xxxx Deposit Slip 5 Deposit Slip 5 Not Recorded In Check Book 3000   21965 (7)
Jan 16, xxxx Deposit Slip 3 Deposit Slip 3 Added Incorrectly
in determining the Current Check Book Balance
    <1000>
20965
 
Jan 23, xxxx Check 110 Added Check 110 for $750
to the Check Book Balance
but Should Have Subtracted
    <1500> 19465  

Let's revisit and take a look at our preliminary bank reconciliation that we prepared earlier and adjust it for the addition and subtraction errors we found.

Preliminary Bank Reconciliation

Balance Per Bank 23315 Our Adjusted Balance
Per Check Book
21965
Plus:      
Deposits In Transit 5600 Unknown Deposit Jan 21 5000
Less:      
Outstanding Checks 4450 Addition & Subtraction
Errors
2500
       
Adjusted Bank Balance 24465 Adjusted Book Balance 24465

The two balances agree ! Can we celebrate yet ? Almost, but what about that unknown deposit for $5,000 deposited on January 21, xxxx that is shown on our bank statement that we don't know what it's for and haven't officially added in our check book ?

Let's review our Deposit In Transit List and see if we can find any clues to help us determine what this $5,000 deposit recorded on our bank statement is for.

Ma and Pa's Deposits In Transit as of January 31, xxxx

Date Reference Amount
Jan 20, xxxx Deposit Slip 4 500
Jan 28, xxxx Deposit Slip 7 700
Jan 30, xxxx Deposit Slip 8 2500
Jan 31, xxxx Deposit Slip 9 1900
Total   5600

If you recall from earlier the bank's cutoff date for our bank statement was January 28, xxxx. That means that transactions that occur after that date won't appear in this month's bank statement but will show up next month.

Why wasn't Ma & Pa's deposit for the $500 on Deposit Slip 4 dated January 20, xxxx processed by the bank ? The bank had 8 days to process it. This might be a clue. Ma dug out Deposit Slip 4 and lo and behold the actual amount recorded on the deposit slip was $5,000. Based on this we need to adjust our Listing Of Deposits in transit and also adjust our check book balance.

Ma and Pa's Corrected Deposits In Transit as of January 31, xxxx

Date Reference Amount
Jan 28, xxxx Deposit Slip 7 700
Jan 30, xxxx Deposit Slip 8 2500
Jan 31, xxxx Deposit Slip 9 1900
Total   5100

Let's take a look at our adjusted check book after correcting this error.

Ma & Pa's Checkbook for January xxxx
With All The Deduction Transactions Adjusted
and All The Deposit Transactions Adjusted
and All The Addition and Subtraction Errors Corrected

Date Reference Number Payee / Description Deposit Amount Deduction
Amount
Balance Reconciled
Jan 5, xxxx Deposit Slip 1 Opening Balance 25000   25000 (1)
Jan 6, xxxx Check 100 Nice Landlord   1000 24000 (a)
Jan 7, xxxx Check 101 Cheap Office Supply   1500 22500 (b)
Jan 8, xxxx Check 102 Old Store   5000 17500 (c)
Jan 8, xxxx Check 103 Smalltown Newspaper   800 16700 (d)
Jan 9, xxxx Check 104 Hotwire Electric   600 16100 (e)
Jan 10, xxxx Check 105 Fixit Right   400 15700  
Jan 11, xxxx Deposit Slip 2 Daily Sales and Collections Report 2000   17700 (2)
Jan 15, xxxx Check 106 Dirtyman Garbage   100 17600 (f)
Jan 6, xxxx Check 100 Nice Landlord   1000 16600  
Jan 16, xxxx Deposit Slip 3 Daily Sales and Collections Report 1000   18600 (3)
Jan 17, xxxx Check 107 Pretty Brochures   200 18400 (g)
Jan 20, xxxx Check 108 Old Store   600 17800 (h)   ?
Jan 20, xxxx Deposit Slip 4 Daily Sales and Collections Report 500   18300 (8)  ?
Jan 23, xxxx Check 110 Sturdy Shipping Crates   750 19050  
Jan 25, xxxx Check 111 Nice Landlord   1000 18050 (i)
Jan 26, xxxx Check 112 Fancy Wholesale Antiques   3000 15050 (j)
Jan 27, xxxx Check 113 Talktoyou Phones   1800 13250  
Jan 26, xxxx Deposit Slip 6 Daily Sales and Collections Report 800   14050 (4)
Jan 28, xxxx Check 114 Talkalot Service   200 13850  
Jan 28, xxxx Deposit Slip 7 Daily Sales and Collections Report 700   14550  
Jan 29, xxxx Check 115 Bean Counter Accounting   300 14250  
Jan 30, xxxx Deposit Slip 8 Daily Sales and Collections Report 2500   16750  
Jan 31, xxxx Deposit Slip 9 Daily Sales and Collections Report 1900   18650  
Jan 31, xxxx Check 108 Adjust Check 108
Recorded wrong check amount
Check's actual amount was 6000
and the amount was
erroneously recorded as 600
  5400 13250 (h)
Jan 10, xxxx ID Record Insurance Draft   400 12850 (k)
Jan 11, xxxx CDP Record Check and Deposit Slip Printing Fees   75 12775 (l)
Jan 14, xxxx CCF Record Credit Card Processing Fees   100 12675 (m)
Jan 19, xxxx NSF Record Check 1083 from
our customer Nogood Credit
that was returned as a "bad check"
  500 12175 (n)
Jan 11, xxxx MSF Record Monthly Statement Fee Charged By Bank   10 12165 (o)
Jan 21, xxxx Check 109 Check 109 Not Recorded In Check Book   200 11965 (p)
Jan 8, xxxx Bank Loan Bank Loan Directly Deposited
In Bank Account Not Recorded
5000   16965 (5)
Jan 14, xxxx Credit Card Sales Credit Card Sales Directly Deposited
Into Bank Account Not Recorded
2000   18965 (6)
Jan 25, xxxx Deposit Slip 5 Deposit Slip 5 Not Recorded In Check Book 3000   21965 (7)
Jan 16, xxxx Deposit Slip 3 Deposit Slip 3 Added Incorrectly
in determining the Current Check Book Balance
    <1000>
20965
 
Jan 23, xxxx Check 110 Added Check 110 for $750
to the Check Book Balance
but Should Have Subtracted
    <1500> 19465  
Jan 20, xxxx Deposit Slip 4 Deposit Slip 4 Recorded In The Check Book
as $500 and Should Have Been
Recorded for the
Correct Amount of $5000.
4500   23965 (8)  ?

Let's now adjust our preliminary reconciliation for the deposit error that we uncovered.

Preliminary Bank Reconciliation

Balance Per Bank 23315 Our Adjusted Balance
Per Check Book
19465
Plus:      
Deposits In Transit 5100 Deposit 4 Correction 4500
Less:      
Outstanding Checks 4450    
       
Adjusted Bank Balance 23965 Adjusted Book Balance 23965

Thank goodness we're finally done. Not so fast. Since we double checked our Listing Of Deposits In Transit, humor me and let's review our Listing of Outstanding Checks.

Ma and Pa's Outstanding Check List as of January 31, xxxx

Date Check Number Payee Amount
Jan 6, xxxx 100 Nice Landlord 1000
Jan 10, xxxx 105 Fixit Right 400
Jan 23, xxxx 110 Sturdy Shipping Crates 750
Jan 27, xxxx 113 Talktoyou Phones 1800
Jan 28, xxxx 114 Talkalot Service 200
Jan 29, xxxx 115 Bean Counter Accounting 300
       
Month Totals     4450

Remember our bank cutoff date was January 28, xxxx, so most of the checks Ma & Pa wrote early in the month should also appear on the bank's statement. Let's look at our list and see if we have any checks we might want to investigate. There are two checks that were written early in the month that we have listed as not appearing in the bank statement that we probably need to investigate.

Date Check Number Payee Amount
Jan 6, xxxx 100 Nice Landlord 1000
Jan 10, xxxx 105 Fixit Right 400

Let's first make sure that these checks don't appear on our bank statement.

Ma & Pa's Bank Statement for January xxxx
With All The Deductions Adjusted
and All Of The Deposit Transactions Adjusted

Wehavemoney State Bank
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Ma and Pa's Antiques
Account Number: 1111111111
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Balance From Prior Statement 0
Deposits 43800
Disbursements  
Checks 19400
Bank Fees and Charges 85
Other Drafts & Charges 1000
Balance as of Jan 28, xxxxx 23315
 
Deposit Details:
Jan 5 25000 (1)
Jan 8 5000 (5)
Jan 11 2000 (2)
Jan 14 2000 (6)
Jan 17 1000 (3)
Jan 21 5000 (8)  ?
Jan 25 3000 (7)
Jan 26 800 (4)
 
Total Deposits 43800
 
Disbursement Details:
Jan 8 100 1000 (a)
Jan 10 101 1500 (b)
Jan 10 ID 400 (k)
Jan 11 102 5000 (c)
Jan 9 103 800 (d)
Jan 10 *104 600 (e)
Jan 11   CDP 75 (l)
Jan 14   CCF 100 (m)
Jan 19 NSF 500 (n)
Jan 20 106 100 (f)
Jan 20 107 200 (g)
Jan 25 108 6000 (h)  ?
Jan 25 *109 200 (p)
Jan 26 111 1000 (i)
Jan 28 112 3000 (j)
Jan 28 MSF 10 (o)
 
Total Checks 19400
Total Bank Charges & Fees 85
Total Other Drafts & Charges 1000
 
Total Disbursements 20485

Abbreviations
NSF- Non Sufficient Funds Check - also known as a "bad check" -
CDP- Check/Deposit Ticket Printing Fees
CCF- Credit Card Fees - fees charged for processing credit card transactions
MSF- Monthly Service Charge
ID - Insurance Draft -preauthorized deduction

What's going on ? We've got Check Number 100 marked as appearing on the bank statement and also in the check book. Remember we used small letters to identify that the cash transaction was recorded in both records. That small a enclosed in parentheses (a) was how we identified that this transaction was recorded in both records.

Let's take a look at Ma and Pa's check book again. Sure enough on January 6, xxxx Check 101 made out to (payee) was recorded in the amount of $1000 and we marked it as appearing in the bank statement and the check mark using the small a enclosed in parentheses (a).

Wait a minute, what about where we highlighted Check 100 in yellow farther down in the check book. That yellow highlight meant it was an outstanding check, but as we can see check 100 was cashed by the bank. Do you see what error Ma and Pa made here ?

They recorded Check 101 twice in their check book. What do we need to do to correct our bank reconciliation and check book. We need to remove this check from our Listing Of Outstanding Checks and adjust our balance in the check book.

As for Check 105 to Fixit Right it's only correctly listed once in the check book. We could call Fixit Right to see when and if they deposited this check or if they lost the check, but in this case we'll wait to next month to see if it shows up in the bank statement.

Let's look at our Final Corrected Check Book, Final Corrected Outstanding Check List, and Final Bank Reconciliation.

Ma & Pa's Final Corrected Checkbook for January xxxx

Date Reference Number Payee / Description Deposit Amount Deduction
Amount
Balance Reconciled
Jan 5, xxxx Deposit Slip 1 Opening Balance 25000   25000 (1)
Jan 6, xxxx Check 100 Nice Landlord   1000 24000 (a)
Jan 7, xxxx Check 101 Cheap Office Supply   1500 22500 (b)
Jan 8, xxxx Check 102 Old Store   5000 17500 (c)
Jan 8, xxxx Check 103 Smalltown Newspaper   800 16700 (d)
Jan 9, xxxx Check 104 Hotwire Electric   600 16100 (e)
Jan 10, xxxx Check 105 Fixit Right   400 15700  
Jan 11, xxxx Deposit Slip 2 Daily Sales and Collections Report 2000   17700 (2)
Jan 15, xxxx Check 106 Dirtyman Garbage   100 17600 (f)
Jan 6, xxxx Check 100 Nice Landlord   1000 16600 C-1
Jan 16, xxxx Deposit Slip 3 Daily Sales and Collections Report 1000   18600 (3)
Jan 17, xxxx Check 107 Pretty Brochures   200 18400 (g)
Jan 20, xxxx Check 108 Old Store   600 17800 (h)   ?
Jan 20, xxxx Deposit Slip 4 Daily Sales and Collections Report 500   18300 (8)  ?
Jan 23, xxxx Check 110 Sturdy Shipping Crates   750 19050  
Jan 25, xxxx Check 111 Nice Landlord   1000 18050 (i)
Jan 26, xxxx Check 112 Fancy Wholesale Antiques   3000 15050 (j)
Jan 27, xxxx Check 113 Talktoyou Phones   1800 13250  
Jan 26, xxxx Deposit Slip 6 Daily Sales and Collections Report 800   14050 (4)
Jan 28, xxxx Check 114 Talkalot Service   200 13850  
Jan 28, xxxx Deposit Slip 7 Daily Sales and Collections Report 700   14550  
Jan 29, xxxx Check 115 Bean Counter Accounting   300 14250  
Jan 30, xxxx Deposit Slip 8 Daily Sales and Collections Report 2500   16750  
Jan 31, xxxx Deposit Slip 9 Daily Sales and Collections Report 1900   18650  
Jan 31, xxxx Check 108 Adjust Check 108
Recorded wrong check amount
Check's actual amount was 6000
and the amount was
erroneously recorded as 600
  5400 13250 (h)
Jan 10, xxxx ID Record Insurance Draft   400 12850 (k)
Jan 11, xxxx CDP Record Check and Deposit Slip Printing Fees   75 12775 (l)
Jan 14, xxxx CCF Record Credit Card Processing Fees   100 12675 (m)
Jan 19, xxxx NSF Record Check 1083 from
our customer Nogood Credit
that was returned as a "bad check"
  500 12175 (n)
Jan 11, xxxx MSF Record Monthly Statement Fee Charged By Bank   10 12165 (o)
Jan 21, xxxx Check 109 Check 109 Not Recorded In Check Book   200 11965 (p)
Jan 8, xxxx Bank Loan Bank Loan Directly Deposited
In Bank Account Not Recorded
5000   16965 (5)
Jan 14, xxxx Credit Card Sales Credit Card Sales Directly Deposited
Into Bank Account Not Recorded
2000   18965 (6)
Jan 25, xxxx Deposit Slip 5 Deposit Slip 5 Not Recorded In Check Book 3000   21965 (7)
Jan 16, xxxx Deposit Slip 3 Deposit Slip 3 Added Incorrectly
in determining the Current Check Book Balance
    <1000>
20965
 
Jan 23, xxxx Check 110 Added Check 110 for $750
to the Check Book Balance
but Should Have Subtracted
    <1500> 19465  
Jan 20, xxxx Deposit Slip 4 Deposit Slip 4 Recorded In The Check Book
as $500 and Should Have Been
Recorded for the
Correct Amount of $5000.
4500   23965 (8)  ?
Jan 6, xxxx Check 100 Check 100 Erroneously Recorded
Twice In The Check Book
  <1000> 24965 C-1

Ma and Pa's Final Outstanding Check List as of January 31, xxxx

Date Check Number Payee Amount
Jan 10, xxxx 105 Fixit Right 400
Jan 23, xxxx 110 Sturdy Shipping Crates 750
Jan 27, xxxx 113 Talktoyou Phones 1800
Jan 28, xxxx 114 Talkalot Service 200
Jan 29, xxxx 115 Bean Counter Accounting 300
       
Month Totals     3450

Ma and Pa's Final Deposits In Transit as of January 31, xxxx

Date Reference Amount
Jan 28, xxxx Deposit Slip 7 700
Jan 30, xxxx Deposit Slip 8 2500
Jan 31, xxxx Deposit Slip 9 1900
Total   5100

Final Bank Reconciliation

Balance Per Bank 23315 Our Adjusted Balance
Per Check Book
24965
Plus:      
Deposits In Transit 5100    
Less:      
Outstanding Checks 3450    
       
Adjusted Bank Balance 24965 Adjusted Book Balance 24965

Are we finally done ? You sound like the kids when you go on a long vacation and they keep asking "Are we there yet ? ". Well the answer to your question is is YES, the balance of $24,965 is the actual reconciled cash balance as of the end of January 31, xxxx. If you recall from earlier, we used two worksheets to help us in preparing our Bank Reconciliation.

  • Transactions In The Checkbook But Not In The Bank Statement
    In other words, we know something that the bank doesn't.
  • Transactions In The Bank Statement But Not In The Checkbook
    The bank knows something that we don't.

After completing our reconciliation, we do not have any Transactions That Appear in the Bank Statement but Not In The Checkbook. In other words, we've recorded all the transactions where the bank knew something that we didn't.

Ma & Pa's Bank Statement for January xxxx
With All The Deductions Adjusted
and All Of The Deposit Transactions Adjusted

Wehavemoney State Bank
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Ma and Pa's Antiques
Account Number: 1111111111
Anywhere Street
Anywhere City, Anywhere State xxxxx
 
Balance From Prior Statement 0
Deposits 43800
Disbursements  
Checks 19400
Bank Fees and Charges 85
Other Drafts & Charges 1000
Balance as of Jan 28, xxxxx 23315
 
Deposit Details:
Jan 5 25000 (1)
Jan 8 5000 (5)
Jan 11 2000 (2)
Jan 14 2000 (6)
Jan 17 1000 (3)
Jan 21 5000 (8)  ?
Jan 25 3000 (7)
Jan 26 800 (4)
 
Total Deposits 43800
 
Disbursement Details:
Jan 8 100 1000 (a)
Jan 10 101 1500 (b)
Jan 10 ID 400 (k)
Jan 11 102 5000 (c)
Jan 9 103 800 (d)
Jan 10 *104 600 (e)
Jan 11   CDP 75 (l)
Jan 14   CCF 100 (m)
Jan 19 NSF 500 (n)
Jan 20 106 100 (f)
Jan 20 107 200 (g)
Jan 25 108 6000 (h)  ?
Jan 25 *109 200 (p)
Jan 26 111 1000 (i)
Jan 28 112 3000 (j)
Jan 28 MSF 10 (o)
 
Total Checks 19400
Total Bank Charges & Fees 85
Total Other Drafts & Charges 1000
 
Total Disbursements 20485

Abbreviations
NSF- Non Sufficient Funds Check - also known as a "bad check" -
CDP- Check/Deposit Ticket Printing Fees
CCF- Credit Card Fees - fees charged for processing credit card transactions
MSF- Monthly Service Charge
ID - Insurance Draft -preauthorized deduction

If you noticed, if we had recorded all our cash transactions accurately as they occurred during the month the only reconciling items we would have would be our Deposits In Transit and our Outstanding Checks.

Bedsides adjusting your check book, the adjustments need to be recorded and distributed to the proper accounts in your bookkeeping records by making adjusting entries in the General Journal or recording them in your Special Journals.

Return To Tutorial