1. Two-Step Reconciliation Process
To perform a bank reconciliation, you must follow a strict, orderly process: update your internal records first, then reconcile the remaining differences.
2. Step 1: Updating the Cash Book
Before comparing balances, you must update the internal Cash Book with any valid transactions shown on the bank statement that you missed, such as bank fees, interest, or direct debits. Once these are entered, calculate a new, adjusted Cash Book balance.
3. Step 2: Preparing the Bank Reconciliation Statement
Next, build a formal Bank Reconciliation Statement to show that your adjusted internal balance matches the bank statement balance once timing differences are accounted for.
                         Alpha Trading Company
             Bank Reconciliation Statement as of July 31, 2026
=============================================================================
Adjusted Cash Book Balance                             $14,200
Add: Unpresented Checks                                  3,100
                                                       -------
Subtotal                                                17,300
Less: Outstanding Deposits (Lodgments)                 (2,500)
                                                       -------
BALANCE AS PER BANK STATEMENT                          $14,800
=============================================================================

 
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