How To Do Or Perform The Bank Statement Reconciliation Process Example Tutorial

In this video we go through how to perform the bank statement reconciliation tutorial with an example, which is the process of checking the bank statement against the check or transaction register. Transcript/notes (partial) In this video we are going to go through a very basic process of completing a bank reconciliation, and this can apply to personal accounts or business accounts. A bank reconciliation is completing the process of checking the bank statement against the check or transaction register. Real quick, a transaction or check register typically looks something like this, where an individual or a business logs withdrawals and deposits from a bank account, into a register. The terms debits and credits are often used, and in checking accounts, debits are when money is taken out of an account, and credits are when money is added to an account. Here is an example of a bank statement, which lists all of the transactions in the account for a given month. This can include electronic deposits, other deposits, checks paid, electronic withdrawals and any charges or fees. There are several different ways to reconcile these and make sure they balance out, but we are going to go through a very simple way to do this. We are going to go through the items in the bank statement, one by one, and check them off in the check or transaction register and on the bank statement, if you are doing this from an online bank statement work downwards and make sure you don’t skip any items. We will start at the top of the account transactions in the bank statement, the electronic deposits and again, work downwards. One note, these check marks in the register mean these items were already accounted for from the last bank statement. First is a deposit of $247.64 on 4/3. In the deposit column on the register, we have that listed, and for all of these we want to make sure the dollar amount is the same, because if that is off, it can create some major headaches, so we will check it off, and we will put a check mark for that on the bank statement. Next is a deposit of $1248.61 on 4/15. We find that in the register, put a check mark there and a check mark on the bank statement. Next deposit is for $1.22 for some interest earned on 4/30. We don’t have that listed in the register, so we need to add it to the register, which I have done here, and now we can put a check mark on the register and the bank statement. Next is a drive through deposit for $343.78 on 4/18. We find that in the register and again check mark on both sheets. Now we have checks paid, which will have the dollar amount in the withdrawal column in the register. The first one is check number 847 for $147.33 on 4/1. We have that in the register, the date is not the same, but that is ok, as it sometimes takes a few days for checks to clear. The main thing is that the dollar amounts are the same, and they are, so we check it off on both sheets. To save some time, the next 3 checks, 848, 849 and 850 are all logged in the register, and their dollar amounts are the same, so we can check those 3 off on both sheets. Next is electronic or debit card withdrawals. First is $44.51 on 4/9, and that is listed in the register, so we check it off on both sheets. The next one for Online TV, for $12.99 on 4/11 is not listed in the register, as maybe it’s an automatic monthly withdrawal and the person forgot to log it. So, we will add it to the register and check it off on both sheets. The next 2, for $107 and $68 are listed on the register, so we can check both of them off on both sheets. And the last one is for a bank fee of $2.99 on 4/30, which is not listed in the register, so we again, will add that in and check it off on both sheets. Now, everything listed in the bank statement is accounted for in the register. The next thing we want to do is find the ending balance from the bank statement, which is here, $4789.95, and the ending balance in the transaction register, which is $4830.72. As you can see, these don’t match. That is because we have these 4 items in the register, 2 checks, 1 electronic withdrawal and 1 deposit that are not accounted for in the bank statement. The checks haven’t cleared, so they are considered checks outstanding, the electronic withdrawal of $56.77 occurred on 5/1, which is after the end date of 4/30 of the bank statement, and the deposit of $278.33 was also after the closing date of the bank statement. Timestamps 0:00 What is a bank reconciliation process? 0:15 What is a check transaction register? 0:26 What are debits and credits? 0:36 Example of a typical bank statement 0:55 How to do the bank reconciliation process 1:26 Start of the process 1:57 Adding in items to the check transaction register 3:47 Comparing ending balances 4:32 Getting ending balances to match 5:17 Summary of getting balances to match 5:45 Common reconciliation problems