Bank Reconciliation: A Step-by-Step Guide (With Template)

A bank reconciliation compares the cash balance in your general ledger to the balance on the bank statement and explains every difference between them. If you are a controller or staff accountant who runs this every month, the goal is a reconciliation your reviewer can sign without redoing it.

This guide walks through seven steps, shows which reconciling items need a journal entry and which do not, and ends with a template you can copy into a spreadsheet.

Before you start: what you need

Gather four things before you open a spreadsheet:

• The bank statement for the period, or a bank feed export that ends on the statement date
• The general ledger detail for the cash account, with the same cutoff date
• Last month's signed bank reconciliation, including its open items
• The list of outstanding checks and deposits in transit from last month

The cutoff date matters more than any other detail. A statement that ends on the 31st and a ledger pulled on the 2nd will disagree by every transaction posted on the 1st and 2nd, and you will spend an hour hunting differences that do not exist.

Step 1: Start with the two ending balances

Write down the ending balance on the bank statement and the ending balance in the general ledger for the same date. Record the statement balance exactly as the bank reports it. Never adjust it to make the sheet look cleaner.

The difference between the two numbers is what the rest of the reconciliation has to explain.

Step 2: Carry forward last month's open items

Pull every open reconciling item from the prior reconciliation. A check outstanding on the 31st may have cleared on the 8th. A deposit in transit may still be sitting in the same place. Mark each one cleared or still open, and keep the original date so you can age it later.

Skipping this step is the most common reason a reconciliation that balanced last month does not balance this month.

Step 3: Match the statement to the ledger

Go line by line. Tick each bank transaction that has a matching ledger entry with the same amount and a date within a few days. Work in this order:

1. Exact matches on amount and date
2. Matches on amount with a date gap (checks usually clear days after they are written)
3. Many-to-one matches, such as a bank deposit that combines several customer payments

Whatever remains unmatched on either side is a reconciling item. Do not force a match to clear a line. A forced match hides the error that created it.

Step 4: Classify each reconciling item

Every unmatched item falls into one of three groups, and the group tells you what to do next.

If you cannot classify an item, escalate it instead of parking it. An unclassified item is a finding, and a reviewer will want to see it named.

Step 5: Adjust both sides to a common balance

Work from both directions to one figure.

Bank side: start with the statement balance, add deposits in transit, subtract outstanding checks, and adjust for any bank errors.

Ledger side: start with the ledger balance, add or subtract the bank-only items, and adjust for any ledger errors.

When the two adjusted balances agree, the account is reconciled. When they do not, the difference is unexplained and the reconciliation is incomplete, whatever the worksheet says.

Step 6: Post the journal entries

Record an entry for each bank-only item and each ledger error. A bank fee debits bank charges expense and credits cash. Interest earned debits cash and credits interest income. Attach the bank statement line as support so the entry traces to its source.

After posting, refresh the ledger balance. It should now equal the adjusted ledger figure from step 5. If it does not, an entry was posted to the wrong account or for the wrong amount.

Step 7: Review and sign off

The preparer signs and dates the reconciliation. A second person reviews it and signs with their own date. The reviewer checks four things:

• Both adjusted balances agree, with no plug line anywhere
• Every open item has an owner and an expected resolution date
• No deposit in transit is older than a few business days
• No check has been outstanding past its staleness window

A deposit "in transit" for four months is a problem, not a timing difference. Stale checks need to be voided or handled under your unclaimed property rules.

The bank reconciliation template

Copy this table into a spreadsheet. One tab per bank account, one reconciliation per period.

The Owner and Resolution columns are where most templates fall short. A reconciling item without an owner has no one responsible for clearing it.

Controls that keep a bank reconciliation honest

Four controls matter most:

• Segregation of duties. The preparer does not handle receipts, disbursements, or the bank relationship.
• Every account, every period. Include dormant accounts. Misappropriation tends to hide in the account nobody looks at.
• No plugs. A line labeled "miscellaneous" or "unreconciled difference" means the account does not reconcile.
• Timely preparation. A reconciliation finished six weeks after period end cannot catch the error that already flowed into the reported statements.

For the wider process around this work, see Account Reconciliation: The Complete Guide and the month-end close checklist.

Where bank reconciliation breaks at scale

One account with forty transactions takes an hour. Thirty accounts with four thousand transactions each take a week, and most of that week goes to matching, not judgment. The reviewer's time is better spent on the twelve items that matched nothing than on the three thousand that matched cleanly.

Adopt's agents run the matching pass across your bank feeds and ledger, record the bank-only items for your approval, and hand you only the exceptions, each with the statement line and ledger entry attached. Nothing posts to your books until a person signs off. Our Bank rec to GL skill shows the same matching discipline as a free download.

Book a Pilot to run it against your messiest account, or start free to see it on one account first.