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