Bank Reconciliation Example: A Full Worked Statement

Here's a full bank reconciliation example, start to finish, using one month of real-looking figures for a small marketing agency. It shows exactly how a bank statement balance and a book balance that are $677.85 apart both turn out to be correct, once four ordinary reconciling items are accounted for properly.

The Scenario

Harlow Creative is a five-person marketing agency closing its books for March. It runs one operating account, pays a handful of freelancers by check most months, and invoices clients on 30-day retainers. Its bank statement shows a closing balance of $9,860.40. Its own cash account, kept in its accounting software, shows $10,378.00. Neither number is wrong. The gap is entirely explained by four items that hadn't finished processing yet, and finding them is the entire job of a bank reconciliation.

None of this is unusual. A business this size typically has somewhere between two and six reconciling items in an ordinary month; a business with dozens of vendors and a busy accounts payable run might have twenty or more. The process scales, but the logic underneath it doesn't change.

This is the same shape of problem in every bank reconciliation: two balances that don't match on the surface, and a short list of reconciling items that explains every dollar of the difference.

Step 1: Lay Out the Two Starting Balances

Before touching any adjustments, write both raw numbers down. This is also the point to check that last month'sreconciliation actually closed, meaning last month's adjusted bank and book balances matched. If they didn't, fix that first; an unresolved prior-period gap will sit inside this month's numbers and make them impossible to tie out cleanly.

What the bookkeeper found when matching line by line

Going through the statement and the cash account together, most transactions matched immediately, same amount, same date, same reference. Four items were left over.

Step 2: Find the Timing Differences

Two checks Harlow's bookkeeper cut in the last few days of March hadn't reached the bank yet: #1180 for $410.00, paid to a freelance photographer, and #1183 for $275.25, a software renewal. Both are already recorded correctly in the books; the bank just hasn't seen them yet. Steven Bragg's definition at AccountingTools captures this precisely: an outstanding check is one that has been recorded by the issuing business, but which has not yet cleared its bank account. Separately, a client retainer of $525.00was deposited at a branch late on March 31st and didn't post to the account until April 1st, a textbook deposit in transit.

None of these three items get a journal entry this month. They're already in the books; they just haven't shown up on a statement yet. Next month, they'll clear the bank and disappear from the outstanding list on their own.

Step 3: Find the Bank-Only Items

The remaining three items are the opposite problem: the bank already knows about them, and the books don't, yet. A $32.00 monthly account fee was charged directly to the account. The bank credited $4.15in interest. And a client's check for $650.00, deposited earlier in the month, bounced and came back marked NSF (non-sufficient funds), meaning the bank reversed the credit it had given Harlow when the deposit first cleared.

Step 4: Build the Two Adjusted Balances

Start from the bank statement and add back the deposit in transit, then subtract the outstanding checks.

Then start from the book balance and back out the items the bank already processed that the books haven't recorded yet.

Both sides land on $9,700.15. The reconciliation is clean: every dollar of the original $677.85 gap between the raw balances is now explained by a named, dated item, not by a mistake.

Step 5: Record What Needs an Entry

The bank-only items need journal entries because they're real transactions the books haven't caught up on. The timing differences need nothing; they'll clear themselves. In a simple debit/credit form, Harlow's entries for the month look like this:

Dr  Bank fees expense              32.00
Dr  Accounts receivable (client)  650.00
    Cr  Cash                              682.00
    (to record bank fee and reverse the NSF deposit)

Dr  Cash                             4.15
    Cr  Interest income                    4.15
    (to record interest earned on the account)

The outstanding checks and the deposit in transit don't appear here at all, they were already booked when the check was written and the deposit recorded, and no further entry is needed until the bank actually processes them.

What If the Two Sides Don't Match?

If Harlow's adjusted balances had come out different, say $9,700.15 on one side and $9,655.00 on the other, that $45.15 gap would mean something was missed, not that the process failed. The usual causes, roughly in order of how often they show up:

1. A transaction was recorded twice, most often a bank fee or a card payment entered manually and then imported again automatically.
2. An item from last month's outstanding list finally cleared this month but was never removed from the running list, so it's being counted twice.
3. A check or deposit was entered on the wrong date, pushing it into the wrong reconciliation period entirely.
4. A number was simply mistyped, a transposed digit is the classic case, $562.00 entered as $652.00.

The fix is mechanical: recheck each list line by line against source documents rather than guessing at a plug figure. A plugged, unexplained adjustment defeats the entire point of the exercise, which is proving the number, not just producing one.

Reading a Finished Reconciliation

A completed reconciliation like Harlow's is worth keeping on file exactly as it stands, the two adjustment schedules, dated, alongside the source statement and CSV export. Account reconciliation of this kind only catches about 5% of occupational fraud cases directly, according to the ACFE's 2024 Report to the Nations, but that figure undersells its value: most of what it catches is quieter than fraud, a returned check, a duplicated fee, a deposit that never posted, the kind of thing that's cheap to fix in month one and expensive to unwind in month six. Filing it as one line on a fixed month-end close checklist is what keeps that filing habit consistent even when the person doing the books changes.

FAQs

For the mechanics behind each step, see how to do a bank reconciliation, step by step, or skip the manual matching with the free bank reconciliation tool, which takes two CSVs and produces this exact adjustment schedule automatically. Ready-made spreadsheets for building your own are in the reconciliation template library.