What journal entries are prepared in a bank reconciliation?

Definition of Journal Entries in a Bank Reconciliation

Journal entries are required in a bank reconciliation when there are adjustments to the balance per books. These adjustments result from items appearing on the bank statement that have not been recorded in the company's general ledger accounts.

Examples of Journal Entries in a Bank Reconciliation

Common adjustments to the balance per books include:

  • Bank fees or service charges for maintaining the account, fees for returned checks, processing wire transfers, check printing, etc.
  • Bank interest earned
  • Loan payments
  • Electronic charges or remittances from suppliers and others
  • Customer's checks that were deposited but are now being returned because of insufficient funds

The journal entries for the bank fees would debit Bank Service Charges and credit Cash.

The journal entry for a customer's check that was returned due to insufficient funds will debit Accounts Receivable and will credit Cash.

Interest earned by the company will be recorded with a debit to Cash and a credit to Interest Income.