6. Checking account reconciliation

How Do You Balance Your Checkbook?

Your roommate, Melanie, is embarrassed. She has never before had a checking account, but she finally opened one last month. Shes standing in the doorway of the kitchen with her check register in one hand and her recently arrived bank statement in the other. Admitting that she doesnt know what to do next, shes asked for your help in learning how to reconcile, or balance, her checkbook.

Being both a good friend and a student of personal finance, youve agreed to walk Melanie through the process. Moreover, knowing the value of asking and answering good questions when learning how to do something, Melanie agreed to answer your questions about the process.

MELANIE: Thanks for helping me with this bank statement thing. So, where do we start?

YOU: Lets start with some preliminary questions. Ill ask and you answer, and well agree on some fundamentals about reconciling bank accounts.

So, why is it a good idea to reconcile your bank account or balance your checkbook?

MELANIE: According to my personal finance book, reconciling my account will help me spot potential errors in the bank statement or my own records, and it will verify my accounts actual balance as of the .

YOU: Youre absolutely correct! Now, according to the experts, how frequently should a bank reconciliation be performed, and how frequently should ongoing or between-statement deposits and withdrawals be verified with the bank?

MELANIE: Thats an easy one. I remember reading that I should reconcile my bank account , but I should verify my ongoing deposit and withdrawal transactions online every couple of days.

YOU: Thats right! Now that youve got the fundamentals under control, lets go through the actual process of balancing the checkbook.

Now, with Melanies latest bank statement and her check register or ledger in hand, you can examine the documents. Use the grey slider along the right-hand side of each of the following boxes to see Melanies bank statement and check register (account ledger).

Using the documentation from the bank and from Melanies check register, construct the bank reconciliation statement for June 26.

Note: Any items that you enter into the bank reconciliation statement should be entered in the order in which they appeared on the account ledger and bank statement.

Melanie Smythes Bank Reconciliation for June 29