Working with Bank Statements

by David Bazile
(Brooklyn )

From Ask the Expert!


Hi my name is David. I currently work for a small retail business. My job is to get the books up to date from the past two years to now. My problem with this is when I retrieve the bank statements. When you reconcile the bank statements, how do you know what entry to journalize from it and how do you know if there are deposits in transit?

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Hi David!

Sounds like you have a job in front of you! I've been there.

When you're going thru bank statements, it helps to have the checkbook or a computer printout of the cash account to refer to. Look to see if each deposit or check is in your checkbook and if it is on the bank statement. Put a little mark by each entry that is in both.
The next step is to see what is in your checkbook (or printout) that did not get marked off. Those entries would be your outstanding checks and your deposits in transit. Then see what is on the bank statement that didn't get marked off. Those items may be items you forgot to enter in your checkbook. So you would need to enter those now.

To see if you balance, add any deposits in transit and subtract any outstanding checks from the ending bank statement balance. This should match your updated checkbook balance.

If not, you missed something. Go back thru the process again.

Hope this helps David!

If you need any more help feel free to ask.

That's what I'm here for.

Kathy

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