How to Do Bank Reconciliation in Excel (with Easy Steps)

Sometimes, you might need to do Bank Reconciliation to manage your financial condition. In Microsoft Excel, you can perform Bank Reconciliation in bulk and within seconds. This article demonstrates how to do bank reconciliation in Excel with easy steps.


Download Practice Workbook

You can download the practice workbook from the link below.


What Is Bank Reconciliation?

Bank Reconciliation is a process to match your Cash Book closing balance with the Bank Statement closing balance for a definite period of time. In many cases, banks might miss out on data like outstanding cheque, deposits in transit, deposits in understating etc. in the Bank Statement. Also, you may miss data like bounced cheque, missing receipts, bank fees, interest received etc. in your Cash Book. Moreover, there may be some errors on either your part or the bank’s part. So, now we perform Bank Reconciliation to match the closing balances considering all these factors.


5 Steps to Do Bank Reconciliation in Excel

Let’s assume you have a Bank Statement and a Cash Book as shown below. Here, we can see that the closing balances don’t match. So, you want to do Bank Reconciliation. In Microsoft Excel, you can easily do Bank Reconciliation. Now, follow the steps mentioned below to do Bank Reconciliation in Excel.

5 Steps to Do Bank Reconciliation in Excel

5 Steps to Do Bank Reconciliation in Excel

Not to mention that we have used Microsoft Excel 365 version for this article, you can use any other version according to your convenience.


⭐ Step 01: Find out Mismatches in Bank Statement and Cash Book

In this step, we will use the MATCH function first to find out which of the Transaction ID matches in the Bank Statement and the Cash Book. Then, we will use the Sort & Filter feature to find out the mismatches in both Bank Statement and Cash Book.

  • First, take the Transaction History from the Bank Statement and copy it to another blank sheet.
  • Then, select cell H5 and insert the following formula.
=MATCH(C5,'Cash Book'!C13:C20,0)

In this case, cells H5 and C5  are the first cell of the column Match and Transaction ID. Also, Cash Book is the worksheet name that contains the Cash Book.

Find Out Mismatches in Bank Statement and Cash Book

Right now, we will use Sort & Filter to find out the mismatches of the Bank Statement with the Cash Book.

  • At this point, go to the Data tab.
  • Then, click on Filter.

Find Out Mismatches in Bank Statement and Cash Book

  • Then, click on the arrow sign in the column heading Match.
  • After that, only select #N/A.
  • Consequently, click OK.

Find Out Mismatches in Bank Statement and Cash Book

  • Eventually, you will get the mismatches in the Bank Statement with the Cash Book.

Find Out Mismatches in Bank Statement and Cash Book

  • Right now, take the Transaction History from the Cash Book and copy it to another blank sheet.
  • Then, select cell H5 and insert the following formula.
=MATCH(C5,'Bank Statement'!C15:C24,0)

In this case, cells H5 and C5 are the first cells in the column Match and Transaction ID respectively. Also, Bank Statement is the worksheet name which contains the Cash Book.

  • Next, drag the Fill Handle for the rest of the cells.

Find Out Mismatches in Bank Statement and Cash Book to do bank reconciliation

  • Subsequently, Sort & Filter the data as shown above to find out the mismatches in the Cash Book with the Bank Statement.

Find Out Mismatches in Bank Statement and Cash Book to do bank reconciliation


⭐ Step 02: Make a Bank Reconciliation Template in Excel

In this step, we will make a Bank Reconciliation Template in Excel. You can make a template as shown in the below screenshot on your own or else you can download the practice workbook and get this template.

Make a Bank Reconciliation Template in Excel


⭐ Step 03: Compute Adjusted Bank Statement Balance

Now, we will compute the adjusted Bank Statement balance.

  • First, include the data like Deposit in Transit below Add.
  • Next, insert the data like Outstanding Cheques below Deduct.

Compute Adjusted Bank Statement Balance

  • Then, insert the following formula in cell E12.
=E5+E7-E10

In this case, cells E5, E7, E10, and E12 indicate the Unadjusted Closing Balance, Deposit in Transit, Outstanding Cheque, and Adjusted Closing Balance respectively.

Compute Adjusted Bank Statement Balance


⭐ Step 04: Calculate Adjusted Cash Book Balance

At this point, we will calculate the adjusted Cash Book balance.

  • First, include the data like Missing Receipts and Interest Received below Add.
  • Then, insert the data like Bank Fees and Bounced Cheques below Deduct.

Calculate Adjusted Cash Book Balance to do bank reconciliation

  • Then, insert the following formula in cell J12.
=J5+J7+J8-J10-J11

In this case, cells J5, J7, J8, J10, J11, and J12 indicate the Unadjusted Closing Balance, Missing Receipts, Interest Received, Bank Fees, Bounced Cheques, and Adjusted Closing Balance respectively.

Calculate Adjusted Cash Book Balance in Excel


⭐ Step 05: Match the Adjusted Balances to Do Bank Reconciliation

Finally, in this step match the Adjusted Closing Balances to finish Bank Reconciliation. In the following screenshot, we can see both the balances for Bank Statement and Cash Book match.

Match the Adjusted Balances to Do Bank Reconciliation


Conclusion

In this article, we have seen the 5 steps of how to do bank reconciliation in Excel. Last but not least, I hope you found what you were looking for from this article. If you have any queries, please drop a comment below. Also, if you want to read more articles like this, you can visit our website ExcelDemy.

Sowmik Chowdhury
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