How this calculator works
A bank reconciliation explains why the cash book and the bank statement disagree. The two records see different things at different times. The bank knows about charges, interest, dishonoured cheques and automatic payments before you have recorded them, so the cash book is adjusted for those. You know about cheques written but not yet cleared and deposits made but not yet credited, so the bank statement is adjusted for those. When both adjusted balances agree, the reconciliation is complete and every difference has been explained. If they do not agree, an item is missing from one side: an unrecorded payment, a transposition error, a duplicate entry or a bank error. This calculator shows the adjusted total for each side and the remaining difference. It assumes all amounts are in the same currency and that the bank statement and cash book cover the same period. Enter adjustments as positive amounts; the calculator applies the direction shown on each field.
Formula
Adjusted cash book = cash book - bank charges - dishonoured cheques - automatic payments + interest earned. Adjusted bank = statement balance + deposits in transit - unpresented cheques. Unreconciled difference = adjusted cash book - adjusted bank. The account reconciles when the difference is zero.
Worked example
A cash book showing $5,000, reduced by $25 of bank charges, $100 of dishonoured cheques and $400 of automatic payments, and increased by $15 of interest, gives an adjusted cash book balance of $4,490. A bank statement of $5,200 plus $300 of deposits in transit less $1,010 of unpresented cheques gives an adjusted bank balance of $4,490. The difference is zero and the account reconciles.
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Frequently asked questions
Which side do bank charges go on?
Adjust the cash book. The bank has already taken the money, but your records may not yet show it. Subtract the charge from the cash book balance and record it in the accounts.
Where do unpresented cheques go?
Adjust the bank statement side. You have already recorded the payment, but the bank has not yet paid the cheque. Subtract unpresented cheques from the statement balance to bring it down to what the bank will eventually show.
What if the two adjusted balances still differ?
Something is missing or wrong. Check for a payment recorded twice, a transposition error such as $540 entered as $450, a deposit recorded in the wrong period, or a genuine bank error. The size of the difference often points to the cause.
How often should I reconcile?
At least monthly, and more often if there is a lot of activity. A monthly reconciliation catches errors while the records are still fresh and gives a reliable cash balance for reporting.
Do I need to record the adjustments in the accounts?
Yes for the cash book side: charges, interest, dishonoured cheques and automatic payments are real transactions that belong in your books. The bank side items are timing differences and normally need no journal entry.