How to do a bank reconciliation: 7 steps and a worked example with real numbers

To reconcile a bank account, compare the bank statement's ending balance with your books' cash balance on the same date. Add deposits the bank has not yet processed and subtract checks that have not cleared. Then record any fees, interest or missing transactions in your books. When the adjusted bank balance and the adjusted books balance match to $0.00 difference, the account is reconciled. Do it for every bank and card account each month.

Updated September 30, 2026 · 5 min read · By the Accountable team

The short version

A reconciliation explains the difference between the books' cash balance and the bank statement's balance on the same date.
Timing items, such as a deposit in transit or an outstanding check, adjust the bank side and need no journal entry.
Items already on the statement but missing from your books, such as fees, interest and unrecorded payments, need a journal entry.
The account is reconciled only when the adjusted balances agree to the cent.
A difference divisible by 9 often means two digits were swapped, and one divisible by 2 often means an entry was recorded with the wrong sign.

A reconciliation separates timing differences from mistakes

Your books and your bank rarely agree on the last day of the month, for two reasons. Some differences are timing: you recorded a deposit or sent a check that the bank has not processed yet. Others are items the bank has recorded that your books have not, or mistakes in your books.

The two kinds are handled differently. You adjust the bank side for timing items and make no entry, because the bank will record them next month. You adjust the books side for everything else, and each of those needs a journal entry so the books are right.

Seven steps reconcile one account

Step 1: Get the bank statement for the month and note its ending balance and its date.
Step 2: Get your books' cash balance for the same account on the same date.
Step 3: Match each transaction on the statement to a transaction in your books, and mark the matched ones.
Step 4: List what is unmatched on each side: books items the bank has not shown (timing) and statement items the books do not have.
Step 5: Compute the adjusted bank balance: statement ending balance plus deposits in transit, minus outstanding checks, corrected for any bank error.
Step 6: Compute the adjusted books balance: books balance plus interest and credits not yet recorded, minus fees and debits not yet recorded, corrected for your own errors.
Step 7: Post a journal entry for each books-side item. The two adjusted balances must now be equal. If not, find the difference before you close the month.

A worked example: $84,250.00 on the statement and $86,552.60 in the books both become $85,600.00

This is a startup's checking account on September 30.

Bank reconciliation for September 30, with each item on the bank or books side
Line	Bank side	Books side
Balance per statement and per books	$84,250.00	$86,552.60
Add: payout booked September 30, credited by the bank October 1 (deposit in transit)	+$3,200.00
Less: check 1042 to the landlord, not yet cleared (outstanding check)	-$1,850.00
Add: interest on the statement, not yet in the books		+$12.40
Less: wire fee on the statement, not yet in the books		-$45.00
Add: a card charge recorded twice in the books		+$280.00
Less: ACH to a contractor on the statement, never recorded		-$1,200.00
Adjusted balance	$85,600.00	$85,600.00

Bank side: 84,250.00 + 3,200.00 - 1,850.00 = 85,600.00. Books side: 86,552.60 + 12.40 - 45.00 + 280.00 - 1,200.00 = 85,600.00. They agree, so the account is reconciled.

The four books-side items each need an entry

Journal entries from the example

Interest: debit Cash $12.40, credit Interest income $12.40.

Wire fee: debit Bank fees $45.00, credit Cash $45.00.

Duplicate card charge: delete the duplicate, or debit Cash $280.00 and credit the expense account $280.00.

Missing ACH: debit Contractor expense $1,200.00, credit Cash $1,200.00.

The deposit in transit and the outstanding check need no entry, because the books already show them.

After these four entries the books' cash balance is $85,600.00 plus the $1,850.00 check that the bank has not cleared, less the $3,200.00 the bank has not credited, so it will equal the bank's balance once October 1 posts. With live feeds, most lines match on their own and the work is these exceptions.

When the difference will not go to zero, check these causes in order

A transaction dated on the wrong side of month end, so it is in one month's books and the other month's statement.
A duplicate, from a feed and an uploaded statement both bringing in the same line.
A missing line, from a feed gap or a disconnected account. Upload the statement to fill it.
A sign error: if the difference is exactly twice an amount, that entry was probably recorded as a deposit instead of a payment, or the other way round.
A transposed number: a difference divisible by 9, such as $27.00 for 54 typed as 45, often means two digits were swapped.
A wrong opening balance, which shows up as a constant difference in every month.

Credit cards reconcile the same way, and every month gets a sign-off

A credit card is reconciled like a bank account with the signs reversed: the statement balance is what you owe, and your books show it as a liability. Reconcile every bank and card account every month, and finish before you lock the month.

Finance teams that do this by hand spend a lot of time on it. Ledge's 2025 survey found 20 to 50 hours a month on cash reconciliation, across three to five systems. The month-end close checklist puts it in step 4 of 12.

Questions founders ask

What is a bank reconciliation?

A comparison of your books' cash balance with the bank statement's balance on the same date, with each difference explained until the adjusted balances match.

What are deposits in transit and outstanding checks?

A deposit in transit is money you recorded that the bank has not yet credited. An outstanding check is a payment you recorded that the bank has not yet paid. Both adjust the bank balance and need no journal entry.

How often should I reconcile my bank account?

Every month for every bank and card account, before you close the month. Some teams also check weekly so errors never pile up.

Which reconciling items need a journal entry?

Only books-side items: bank fees, interest, unrecorded payments and deposits, and your own recording errors. Timing items like outstanding checks need none.

What if my reconciliation is off by a few cents?

An account is reconciled only when the difference is $0.00, so look for rounding, a foreign-currency line or a missing small fee. Cents that never resolve usually come from one wrong amount, not many.

Reconcile from the Close page in a few clicks

On Accountable's Close page, each account shows Ties, Statement missing or Off by an amount. Upload the statement or type its ending balance, add what is missing with Add from statement, and press Reconcile when the difference is $0.00.

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Sources, checked September 30, 2026: