Bank Rec’s

Shortly after graduating college, I had the opportunity to rent a single family home with 4 of my closest friends in the Washington, D.C. metro area.   I had secured a job as a staff accountant with a national firm and a few of my friends had jobs on the hill.

I remember going to the ATM with one of my roommates to get some money before heading out to dinner one evening.   When the receipt printed out, my roommate acted surprised that the balance was so high.

I made a comment about the fact that he couldn’t count on that balance as being accurate and he seemed surprised.   I asked him if he had ever reconciled his bank account and his response frightened me a bit.   “Do what?”

It wasn’t until much later in life that I realized how many people go through life without knowing how to reconcile their bank account.

It isn’t complicated and if you get in the habit of doing it monthly, it won’t take more than 10 minutes of your time.   Most of the banking software out there allows you to download the activity directly from the bank website and tie everything back to your register, which makes it even easier nowadays.

The goal is to make sure that you have accounted for everything that the bank is showing as having cleared your account since it’s easy to miss something.   Of course, there is also the chance that you have written a few checks that haven’t cleared the bank yet and that is why the bank balance is usually higher than what you actually have.

You should start with the ending bank balance and work your way back to the balance as shown in your check register.    If the bank shows a balance of $2,000 and you have $500, then there should be a check (or multiple checks) totaling $1,500 that haven’t cleared the bank.    If the bank shows a balance of $1,990 and you have $500 and there is one check for $1,500 that hasn’t cleared the bank yet, then you have to figure out what the $10 difference is.   More than likely, the difference is comprised of a bank service charge that you neglected to record on your register.

If you have any questions or would like more information, please contact:

Joanne Shaver
302-656-6632
JShaver@CoverRossiter.com