Bank Reconciliation Example: A Full Month, Worked Line by Line

Here is one month of a real-shaped small business account reconciled from start to finish: the bank statement, the cash ledger, every difference between them identified by name, and the journal entries that close the gap. The account starts $684.40 apart and ends at zero difference, and every number below is shown rather than asserted.

The concepts, and which side each item belongs on, are in the parent guide on bank reconciliation. This page is the arithmetic.

What are we reconciling?

Northgate Print Co. runs one operating checking account. August closed with nothing outstanding, so both records open September at $12,480.00. That is a convenience for the example: normally your book opening balance is last month's adjusted balance and will not match the bank's if checks were outstanding.

$684.40 is not one error. It is six separate things pulling in different directions, which is normal and the reason a reconciliation is a listing exercise rather than a hunt for one mistake.

The bank statement

Everything the bank posted in September.

The cash ledger

Everything Northgate recorded against the cash account.

Step 1: match what agrees

Work down one record and tick every line that appears on the other at the same amount, then date, then description. Ten items match cleanly: the four deposits of $4,200.00, $3,615.00, $2,950.00 and $4,410.00; checks 2041 ($1,150.00), 2042 ($640.00), 2043 ($975.00) and 2045 ($1,780.00); and the payroll and utilities ACH payments of $6,800.00 and $412.00.

Note that checks do not clear in order. Check 2045 cleared on September 25 while 2044 has not cleared at all, which is ordinary, and it is why you match on amount rather than sequence. What is left unticked is your entire reconciliation.

Step 2: what is left on the bank side?

Two things Northgate recorded that the bank has not yet seen:

The September 30 deposit is the classic month-end item, banked on the last business day and posted October 1. Federal Regulation CC, which implements the Expedited Funds Availability Act, sets the schedules banks work to when making deposited funds available, and a late-day deposit is routinely credited the next banking day. The outstanding checks are the same item in reverse: money committed, entry correct, recipient has not banked it yet.

No journal entries come out of this step. That is the tell for a bank-side item: if it needs an entry, it belonged on the book side.

Step 3: what is left on the book side?

Five statement lines have no counterpart in the ledger, and one ledger line has none on the statement.

Three of those are costs the bank took that nobody entered. The processor's cut and the service charge go missing most often, because they never generate a bill and nobody is waiting for them. The subscription is the third pattern: an automatic payment set up months ago that nobody watches.

The NSF is different in kind. A customer's $1,200.00 check was deposited and recorded as payment, then returned unpaid on the 26th. The cash is gone and the customer still owes it, so the entry must reduce cash and restore the receivable.

The duplicate is worth studying. The Ridgeline Paper ACH of $2,340.00 was entered on September 5 and again on September 6. The bank shows it once, because it happened once, so the books understate cash by $2,340.00 and reversing it adds that back.

Note which way round this is. Duplicated in the books only costs no money, it just makes cash and payables wrong. Duplicated at the bank, twice on the statement and once in the ledger, means $2,340.00 actually left twice and someone calls the supplier today. Reconciliation tells you which one you have.

Step 4: do the two sides agree?

The account is reconciled and every dollar is attached to a named item. The bank side moved $1,447.00 and the book side $762.60, so the $684.40 you first saw is only the difference between those totals. That is why "the gap is small so it is probably fine" is a bad instinct: a small difference can be two much larger errors cancelling.

Step 5: what journal entries does this produce?

The reconciliation is finished not when the columns match but when the ledger reflects it. Five entries, dated September 30:

Entry 3 reverses the customer payment: cash down, invoice back on the receivables ledger where it can be chased. Entry 5 reverses the duplicated supplier payment, putting $2,340.00 back into cash and back into accounts payable.

Net effect on cash: −$186.40 − $149.00 − $1,200.00 − $42.00 + $2,340.00 = +$762.60. Add that to the $12,665.00 the ledger showed and you get $13,427.60. If your entries do not reproduce the adjusted book balance to the cent, one is posted backwards. Nothing is entered for the deposit in transit or the outstanding checks.

Step 6: how do you prove it carried forward?

This is the step almost everyone skips, and the one that catches a fudged reconciliation. October 1 opens at $13,427.60. Predict what the bank does with the three items still in flight:

The same number. Carry the three items onto October's reconciliation and tick them off as they clear. If check 2044 is still outstanding in March, that is a signal in itself: never received, or voided without a ledger entry. Checks aging past about six months are stale-dated, and unclaimed funds eventually become a state reporting obligation with dormancy periods that vary by state.

What would this have cost if nobody looked?

Every item has a consequence beyond a wrong balance. $377.40 of real costs never reached the profit and loss statement, and two of those three recur monthly. $1,200.00 was recorded as collected when it was not, with the invoice gone from the receivables ledger so nobody would chase it. $2,340.00 of accounts payable was shown as paid: a real debt, invisible. And cash was overstated by $684.40 on every report built from the ledger.

The IRS makes the expectation explicit rather than implied. Publication 583, Starting a Business and Keeping Records tells business owners to make the statement, the checkbook and the books agree, sets out a four-step reconciliation, and says to do it each month.

There is also a deadline you do not control. Under UCC 4-406, a customer who fails to discover and report an unauthorized signature or alteration within one year of the statement being made available loses the right to assert it against the bank, and deposit agreements often set a shorter window. A reconciliation nobody performed is a year that ran out quietly.

What if it will not balance?

Two checks first: the statement period and the ledger period must cover exactly the same dates, and your opening balance must equal last month's closing adjusted balance. Those account for most failures. Beyond that, the parent guide's troubleshooting list is ordered by how often each cause is the answer, including the divide-by-nine test for a transposed digit. And do not plug it: a suspense entry that makes the columns agree hides precisely the six things we just found.

What to do next

Run this against your own last closed month, using the bank's PDF statement, the ledger detail over identical dates, and a blank form. The bank reconciliation template here has the supporting schedules already laid out.

If items keep landing on the wrong side, the cause is often the account structure rather than the reconciliation. Merchant fees with nowhere sensible to go, or one "bank charges" account absorbing four unrelated things, both make this harder than it needs to be, and our chart of accounts guide covers the fix.

If you are months behind, start with the oldest: reconciliations run in sequence because each opening balance is the previous closing balance. Of the 27,281 US accounting firms we profile, 2,028 advertise both bookkeeping and financial statement preparation, the combination you want if you need reconciled books and statements a lender will accept. Browse bookkeeping services and ask two things: whether monthly reconciliation of every account sits inside the quoted fee, and who reviews the reconciliation after it is prepared.

Method

Firm counts come from the AccountingNearYou dataset as of 28 August 2026: 27,281 US accounting firms profiled from their own public websites, of which 2,028 name both bookkeeping and financial statement preparation. A firm is counted as offering a service when it says so on the pages we crawled, so read this as what firms advertise rather than everything they will do.

Northgate Print Co. is illustrative: the amounts demonstrate the method, they are not drawn from any real business, and none is a benchmark. This is general information, not accounting or tax advice. How a specific item is recorded, including an NSF item where sales tax was already remitted, depends on your entity and your state.