Bank Reconciliation Journal Entries
Quick Answer: Bank reconciliation journal entries record items that appear on the bank statement but not yet in your books—NSF checks, bank fees, interest earned, and errors. Outstanding checks and deposits in transit require no entry (timing differences).
1. Book-to-Bank Adjustments (You Record These)
NSF Check
Dr. Accounts Receivable [Customer] — $500
Cr. Cash — $500
(Customer check bounced)
Cr. Cash — $500
(Customer check bounced)
Bank Service Fees
Dr. Bank Service Fee Expense — $25
Cr. Cash — $25
Cr. Cash — $25
Interest Earned
Dr. Cash — $15
Cr. Interest Income — $15
Cr. Interest Income — $15
Error Correction (You over-recorded a check)
Dr. Cash — $90
Cr. Accounts Payable [Vendor] — $90
(Check written for $310, recorded as $400)
Cr. Accounts Payable [Vendor] — $90
(Check written for $310, recorded as $400)
2. No Entry Required (Bank Timing Differences)
- Outstanding checks: Already recorded in books, checks issued but not cleared
- Deposits in transit: Already recorded in books, funds deposited but not processed
3. Complete Example
Per books: $12,500. Per bank: $14,200.
- Outstanding checks: $3,200
- Deposits in transit: $1,500
- NSF check: $500
- Bank fee: $25
- Interest: $15
Adjusted book balance: $12,500 - $500 - $25 + $15 = $11,990
Adjusted bank balance: $14,200 - $3,200 + $1,500 = $12,500
(Note: Additional adjustment needed for $510 error found)
