How do you prepare a bank reconciliation with a book balance of $8,240, a bank balance of $9,100, deposits in transit of $1,200, and outstanding checks of $2,060?

What you are reconciling

A bank reconciliation explains why the cash balance on the bank statement differs from the cash balance in the company’s books. You list timing differences like deposits in transit and outstanding checks, then compute an adjusted bank balance and an adjusted book balance that should match.

Adjusting the bank statement balance

Start with the bank statement balance and adjust for items the bank has not yet recorded.

• Bank statement balance: $9{,}100$
• Add: deposits in transit (recorded in books, not yet by bank): $+1{,}200$
• Less: outstanding checks (recorded in books, not yet cleared by bank): $-2{,}060$

Adjusted bank balance: $$ 9{,}100 + 1{,}200 - 2{,}060 = 8{,}240 $$

Comparing to the book balance

• Book balance given: $8{,}240$
• Adjusted bank balance computed: $8{,}240$

Because they match, there are no additional book reconciling items (like bank fees, interest earned, NSF checks, or bank errors) provided to record.

Finished bank reconciliation (report format)

Bank Reconciliation

Bank side

• Bank balance per statement: $9,100
• Add deposits in transit: $1,200
• Less outstanding checks: $(2,060)
• Adjusted bank balance: $8,240

Book side

• Book balance per cash account: $8,240
• Adjusted book balance: $8,240

Reconciled cash balance: $8,240