Bank Reconciliation Calculator
Enter your cashbook balance and bank statement balance, then add the items that appear on only one side. The calculator adjusts both balances and shows whether they agree. When the unreconciled difference is zero, your books are balanced.
What is bank reconciliation?
Bank reconciliation is the process of comparing your own accounting records (the cashbook or check register) with the transactions shown on your bank statement and explaining every difference. At the end of the process both "adjusted" balances must agree. If they do, you have proof that every payment and receipt has been captured correctly and that no unauthorised transactions have slipped through.
Why the balances rarely match at first
Even with perfect record-keeping, your cashbook and bank statement will almost always show different figures at any given moment. Timing differences are the main reason. Deposits in transit are amounts you have recorded and sent to the bank, but the bank has not yet credited them to your account. Outstanding cheques are payments you have written and recorded, but the recipient has not yet cashed them. On the cashbook side, you may not yet know about bank charges, returned cheques, interest, or automatic debits until you receive the statement. None of these represent errors, they are simply items that appear on one record before the other.
How to use this calculator
Enter the closing balance from your cashbook and the ending balance from your bank statement. Then work through the two adjustment groups. Under "Adjustments to Cashbook" add items the bank has processed that you have not yet recorded: bank charges, NSF cheques, automatic payments, and interest earned. Under "Adjustments to Bank Statement" add items you have recorded but the bank has not yet processed: deposits in transit and outstanding cheques. The calculator adjusts both balances in real time. When the unreconciled difference reaches zero, the reconciliation is complete. If a difference remains, the insight panel will give you a diagnostic tip, such as whether the amount is divisible by 9 (a classic sign of a transposition error).
Journal entries after reconciliation
Completing the reconciliation tells you what to record, it does not record it for you. For each item in the cashbook adjustment column you need a journal entry: debit the relevant expense or asset account and credit cash (or vice versa for additions). For example, a bank service charge of $7 becomes a debit to Bank Charges Expense and a credit to Cash. Outstanding cheques and deposits in transit do not require journal entries because they are already in your books; they just have not cleared the bank yet.
Common reconciling items and where they appear
| Item | Appears in | Missing from | Adjustment required |
|---|---|---|---|
| Deposit in transit | Cashbook | Bank statement | Add to bank balance |
| Outstanding cheque | Cashbook | Bank statement | Deduct from bank balance |
| Bank service fee | Bank statement | Cashbook | Deduct from cashbook balance |
| NSF / returned cheque | Bank statement | Cashbook | Deduct from cashbook balance |
| Interest earned | Bank statement | Cashbook | Add to cashbook balance |
| Auto direct debit | Bank statement | Cashbook | Deduct from cashbook balance |
| Bank error | Bank statement only | Cashbook | Adjust bank balance; notify bank |
| Cashbook error | Cashbook only | Bank statement | Correct cashbook entry |
Use this as a quick checklist when searching for the source of a discrepancy.
Frequently asked questions
What does "reconciled" mean in accounting?
Reconciled means the adjusted cashbook balance and the adjusted bank statement balance are equal. It confirms that all transactions have been captured on both sides (once timing differences are accounted for) and that there are no unexplained discrepancies.
How often should I reconcile my bank account?
Monthly is standard for most businesses and individuals who use statements. Reconciling monthly keeps the task manageable, catches fraud quickly, and ensures financial reports reflect the true cash position. High-volume businesses sometimes reconcile weekly or even daily.
Can the adjusted balance be negative?
Yes. If your account is overdrawn, or if adjustments such as NSF cheques and bank charges exceed the opening balance, the adjusted balance will be negative. That simply means the account is in deficit, which is a normal outcome in an overdraft facility. The reconciliation is still valid as long as both adjusted balances agree.
What is a deposit in transit?
A deposit in transit is money (cash or cheques) that you have recorded in your cashbook and physically deposited, but that the bank has not yet credited to your account on the statement. This happens when deposits are made near the statement cut-off date or via a night deposit box. It is added to the bank statement balance during reconciliation.
What are outstanding cheques?
Outstanding cheques (also called unpresented cheques) are payments you have written and recorded in your cashbook, but that the payee has not yet deposited or cashed. They are deducted from the bank statement balance because the bank will not show the outflow until the cheque clears.
What if the difference is divisible by 9?
A difference divisible by 9 is a strong hint of a transposition error: two digits that were accidentally swapped when recording a transaction (for example, writing $918 as $198 produces a difference of $720, which is 9 x 80). Compare the transaction list digit by digit against your source documents to find the culprit.
What if I cannot find the discrepancy?
Start by checking for the unreconciled amount as a single transaction. If you find it entered twice, it is a duplicate. If you find a credit where there should be a debit, it is a sign-reversal error. Also check for a transaction equal to half the difference, which suggests an amount was entered on the wrong side of the ledger. If you still cannot locate it, the bank may have made an error: call them with the specific amount and date, and request a corrected statement.