Bank Reconciliation Statement: Steps with an Example

A bank reconciliation statement (BRS) explains the difference between the bank balance in your books and the balance on the bank statement on the same date. It is one of the most useful month-end checks for any business.

Why the two balances differ

1. Cheques issued but not presented. You wrote a cheque on 28 September and entered it; the supplier deposits it in October.
2. Deposits not yet credited. You deposited a cheque on 30 September; the bank credits it on 2 October.
3. Bank charges and interest. The bank debits charges or credits interest that you see only on the statement.
4. Direct credits and debits. A customer pays by NEFT, or an insurance premium goes by ECS, without an entry in your books.

Errors on either side are the fifth reason, and the one a BRS is best at catching.

Steps

1. Take the bank column of your cash book and the bank statement for the same month.
2. Tick every entry that appears in both.
3. List the unticked book entries: unpresented cheques and uncleared deposits.
4. List the unticked statement entries: charges, interest, direct credits and debits.
5. Start from the balance as per books and adjust:

• add cheques issued but not presented,
• subtract deposits not yet credited,
• add credits in the bank not in books,
• subtract debits in the bank not in books.

6. The result should equal the statement balance.

A worked example

Balance as per books on 30 September: ₹1,13,500.

• Add cheques not presented: ₹15,600 + ₹9,400 = ₹25,000.
• Less deposit not credited: ₹21,500.
• Add NEFT received not in books: ₹8,000; add interest: ₹412.
• Less bank charges: ₹354; less ECS premium: ₹2,600.

Worked out bank balance: 1,13,500 + 25,000 − 21,500 + 8,412 − 2,954 = ₹1,22,458. If the statement shows the same, you are reconciled. If not, look for a wrong amount or a missed entry.

After reconciling

Enter the bank-only items (charges, interest, NEFT receipt, ECS) in your cash book, so next month starts clean. Follow up any cheque older than three months.

A ready format

Our Bank Reconciliation Statement Maker lets you tick cleared items, add bank-only entries and see the reconciled balance and the difference immediately, in Excel or Google Sheets.