| A bank statement reconciliation or "bank rec" | | | | checks are in your records, but are not yet |
| is an important step in maintaining the | | | | on any bank statement, PUT THEM WHERE THEY |
| accuracy of your financial records. When a | | | | AREN'T. Deduct the amounts of the four checks |
| bank rec is getting you down, it might help | | | | from the balance on the bank statement. |
| to recall this simple rule: PUT IT WHERE IT | | | | (Occasionally, one or more checks written in |
| ISN'T. | | | | previous months are among the checks not yet |
| | | | clearing the bank account.) |
| Here are three unrelated items to illustrate | | | | |
| this easy-to-remember rule: | | | | Each of the items that you need to put into |
| | | | your accounting records will involve two |
| Item 1. The bank statement shows a | | | | accounts because of double-entry accounting. |
| maintenance fee of $6.00. Since this bank | | | | Item 1 will involve a cash account and an |
| fee is shown on the bank statement, you need | | | | expense account. In accounting terms, this |
| to PUT IT WHERE IT ISN'T. This means you will | | | | means a credit to the account Cash for $6.00 |
| need to subtract $6.00 from the cash balance | | | | and a debit to the account Bank Fees Expense |
| shown in your records. | | | | for $6.00. (No entry was required for Item 2 |
| | | | or Item 3, since these items are already in |
| Item 2. Your records indicate that $150 was | | | | your records.) |
| deposited near the end of the period | | | | |
| indicated on the bank statement. However, the | | | | After adjusting the balance on the bank |
| deposit is not shown on the bank statement. | | | | statement and the balance in your records, |
| After confirming that the bank has received | | | | the two adjusted balances should agree. If |
| that deposit, PUT IT WHERE IT ISN'T. You need | | | | the adjusted balances do not agree, you need |
| to add $150.00 to the balance shown on the | | | | to compare every item in your records and on |
| bank statement. | | | | the bank statement. It is possible that you |
| | | | or the bank may have entered an amount |
| Item 3. Of the many checks written, four have | | | | incorrectly. Also recheck your math. |
| not yet cleared the bank. Since the four | | | | |