Key takeaways
What this article covers, in order:
- The business and the starting point
- Step 1: Match everything that appears in both places
- Step 2: What's in her books but not on the statement?
- Step 3: What's on the statement but not in her books?
- Step 4: Check for errors
- Step 5: The bank reconciliation statement
Reading about reconciliation only gets you so far. Watching one get done, with actual dollars and cents, is what makes it click. So here's a complete bank reconciliation example for one month, covering unpresented cheques, deposits in transit, bank fees, merchant fees, interest and one honest typo, with every figure checked.
The business and the starting point
Leah runs a small physiotherapy clinic in Wollongong. She's an illustrative example, but her situation is common: patients pay by card at the front desk, a couple of insurers and older patients still pay by cheque, and Leah herself writes the occasional cheque to suppliers who prefer them.
It's early Sep 2026 and she's reconciling her business account for August 2026.
- Bank statement closing balance, 31 Aug 2026: $27,415.80
- Cash at bank in her books, 31 Aug 2026: $27,633.58
Her books say she has $217.78 more than the bank does. Let's find out why.
Step 1: Match everything that appears in both places
Leah works through the statement and her ledger together, ticking off each transaction that appears in both with the same amount. Patient card settlements, rent, her equipment lease, the supplier payments that cleared. This is the bulk of the work and, honestly, the boring bit. Most lines match first time.
What's left after the ticking is where the reconciliation actually happens.
Step 2: What's in her books but not on the statement?
Deposits in transit
| Date | Description | Amount |
|---|---|---|
| 31 Aug 2026 | Card takings, final day of month (settled 1 Sep 2026) | $1,186.50 |
| 31 Aug 2026 | Cheque from a patient, deposited after the bank's cut-off | $640.00 |
| Total deposits in transit | $1,826.50 |
Both are real money Leah has received and recorded. The bank just hadn't credited them by the statement date.
Unpresented cheques
| Cheque no. | Date written | Payee | Amount |
|---|---|---|---|
| 000418 | 22 Aug 2026 | Equipment repairer | $385.00 |
| 000419 | 28 Aug 2026 | Sports supplies wholesaler | $1,240.00 |
| Total unpresented cheques | $1,625.00 |
An unpresented cheque is one you've written and recorded but the payee hasn't banked yet. As far as the bank knows, that money is still in your account. As far as your books know, it's gone. Both are right for now.
Step 3: What's on the statement but not in her books?
| Date | Description | Amount | Effect on books |
|---|---|---|---|
| 31 Aug 2026 | Account-keeping fee | $10.00 | Decrease |
| 31 Aug 2026 | Merchant facility fee for the month | $48.70 | Decrease |
| 31 Aug 2026 | Interest earned | $6.42 | Increase |
None of these were in Leah's books because she only finds out about them when the statement arrives. That's normal.
Step 4: Check for errors
With the timing items and bank-only items listed, Leah does a quick test calculation and the numbers still don't sit right. She goes back through her August 2026 supplier payments and spots it: an EFT to her linen service was $426.00 on the statement, but she'd entered it as $462.00.
Swapped digits. Her books show $36.00 more going out than really did, so her book balance is $36.00 too low.
A handy rule: when two digits get swapped, the difference is always divisible by 9. Here, $36.00 ÷ 9 = $4.00. If you ever see a stubborn difference that divides cleanly by 9, look for a transposition first.
Step 5: The bank reconciliation statement
Now everything comes together on one page.
Bank side
| Amount | |
|---|---|
| Closing balance per bank statement | $27,415.80 |
| Add: deposits in transit | $1,826.50 |
| Less: unpresented cheques | −$1,625.00 |
| Adjusted bank balance | $27,617.30 |
Working: $27,415.80 + $1,826.50 = $29,242.30. Then $29,242.30 − $1,625.00 = $27,617.30.
Book side
| Amount | |
|---|---|
| Cash at bank per books | $27,633.58 |
| Less: account-keeping fee | −$10.00 |
| Less: merchant facility fee | −$48.70 |
| Add: interest earned | $6.42 |
| Add: correction of linen service payment ($462.00 entered, $426.00 actual) | $36.00 |
| Adjusted book balance | $27,617.30 |
Working: $27,633.58 − $10.00 = $27,623.58. Less $48.70 = $27,574.88. Plus $6.42 = $27,581.30. Plus $36.00 = $27,617.30.
Both sides land on $27,617.30. August 2026 is reconciled.
And that original $217.78 gap? It's the net of everything above: the timing items add $201.50 to the bank side ($1,826.50 − $1,625.00), and the book adjustments take $16.28 off the book side ($10.00 + $48.70 − $6.42 − $36.00). Add $201.50 and $16.28 and you get $217.78. Every cent accounted for.
Step 6: The entries Leah posts in her books
Only the book-side items get entered. The timing items don't, because they're already in her books.
| Entry | Debit | Credit | Amount |
|---|---|---|---|
| Account-keeping fee | Bank fees (expense) | Cash at bank | $10.00 |
| Merchant facility fee | Merchant fees (expense) | Cash at bank | $48.70 |
| Interest earned | Cash at bank | Interest income | $6.42 |
| Fix linen service payment | Cash at bank | Laundry and linen (expense) | $36.00 |
In most accounting software you wouldn't type these as journals. You'd categorise the fee and interest lines from the bank feed, and edit the original linen payment from $462.00 to $426.00. The table just shows what's happening underneath.
A note on GST: fees and interest are not all treated the same way for GST. Check whether the statement or the merchant's tax invoice shows GST before you pick a code. Keep GST coded correctly; your BAS agent or accountant handles lodgement.
Step 7: Carry the outstanding items forward
Leah's September 2026 reconciliation starts with four items to watch:
- $1,186.50 card takings (should clear 1 Sep 2026)
- $640.00 patient cheque (should clear within a few business days)
- cheque 000418, $385.00
- cheque 000419, $1,240.00
The deposits will almost certainly clear in the first days of September 2026. The cheques depend on the payees. If one of them is still sitting there in a few months, she'll follow it up with the payee.
What this example teaches
A few things worth pulling out:
- The gap was not one mistake. It was eight items, only one of which was an error. Don't assume the difference is a single missing transaction.
- Timing items never touch your books. You list them. They sort themselves out.
- Bank-only items always do. Fees and interest need recording every month, even when they're tiny.
- Write the working down. If your figures don't agree, having the sums laid out makes it far easier to see where you slipped.
How HelloBooks helps
HelloBooks puts the statement and the ledger side by side on its reconcile screen. Each statement line gets an AI match suggestion with a confidence score and a reason, so the matching in Step 1 is mostly confirming, and you're left with exceptions like Leah's fees and her typo. Unmatching a wrong pairing takes one click.
At the end you get a reconciliation report with the opening balance, cleared items, outstanding items and closing balance, exportable as PDF or CSV. Once you sign off, the period can be locked, and any reopening is logged. You can connect your bank account or import a CSV statement. See the bank reconciliation software page or browse the full bookkeeping features.
FAQs
What's the difference between an unpresented cheque and an outstanding deposit?
An unpresented cheque is money going out that hasn't cleared yet. An outstanding deposit (deposit in transit) is money coming in that hasn't been credited yet. One reduces the adjusted bank balance, the other increases it.
Do I record unpresented cheques again in my books?
No. They're already recorded when you wrote the cheque. You just list them on the reconciliation until the payee banks them.
Why are bank fees added to the book side and not the bank side?
Because the bank has already deducted them. Your books are the ones that are behind, so the adjustment goes there.
What if the adjusted balances are close but not equal?
Look at the size of the difference. If it divides by 9, check for swapped digits. If it's double a transaction, check for a reversed sign. If it equals a transaction, check for a missing or duplicated entry.
Should interest earned be recorded monthly?
Yes, record it when it appears on your statement, even if it's a few cents. It's income and it changes your balance.
Next month will have different numbers, but exactly the same shape. That's the good news.
Start free, no card needed. Try HelloBooks Free
