Dental practice bank reconciliation proves that one bank statement and the corresponding cash ledger agree after identified timing differences and supported corrections. Match the same account and cutoff date, explain every unmatched item, post the necessary book entries, and have an authorized reviewer inspect the result. Never use a miscellaneous adjustment simply to make the difference zero.
This is a historical cash check. The production-and-collections reconciliation answers different questions about services, receipts, and receivables. A bank reconciliation can tie perfectly while a patient payment is applied to the wrong account, so that separate ledger work still matters.
Begin with one account and one statement period
Obtain the complete bank statement directly through authorized bank access, the cash-account ledger for the same period, the prior completed reconciliation, and supporting deposit and payment records. Identify the legal entity, bank account, statement end date, and ledger account on the workpaper.
Check that the ledger's opening balance agrees with the prior completed reconciliation. Review outstanding items carried from that period before adding new ones. If a prior book entry changed after sign-off, establish who changed it and why; do not hide that movement in the current month's total.
Use the statement's closing balance rather than a live online balance that includes later activity. The IRS recommends reconciling checking accounts monthly and correcting missing charges or recording errors so adjusted bank and book balances agree. IRS Publication 583, checking-account reconciliation
Match transactions before classifying differences
Work through deposits and payments using date, amount, bank reference, check number, or settlement identifier. Matching by amount alone can connect the wrong two transactions when several payments are identical.
For grouped deposits, trace the bank credit to its component receipts or settlement report. For transfers between practice accounts, check both accounts and identify the transfer consistently. A transfer is not new patient revenue merely because money entered this account.
When card or insurer payments arrive in batches, use the actual provider's settlement detail to explain the deposit. Determine how fees, refunds, or other deductions were recorded. The merchant-services comparison includes questions about settlement reports and whether fees are deducted or billed separately.
Then assign each unmatched item to the correct side:
| Finding | Reconciliation treatment |
|---|---|
| Deposit already recorded in cash ledger, absent from the statement | Add to the bank side as a supported deposit in transit |
| Payment already recorded in cash ledger, not cleared by the bank | Subtract from the bank side as an outstanding payment |
| Bank charge or automatic debit missing from the ledger | Record the supported book adjustment |
| Office entry recorded for the wrong amount | Correct the books using the original transaction evidence |
| Bank transaction confirmed as erroneous | Show the appropriate bank-side correction and track the bank's resolution |
| Difference with no supported explanation | Keep an unresolved exception; investigate before sign-off |
A timing item already recorded correctly in the books does not need another cash entry. Recording the deposit or payment again would create a new error.
Recalculate both sides of a worked example
All amounts and events below are hypothetical. Assume the practice has verified the underlying records and identified every difference for this one statement period.
The statement closes at $48,250. A $6,200 deposit is already recorded in the cash ledger but appears on the next statement. Three recorded checks for $1,400, $2,150, and $1,200 remain outstanding. The bank also confirms that it incorrectly debited $300 belonging to another account; its correction occurs after the statement cutoff.
| Bank-side calculation | Amount |
|---|---|
| Statement closing balance | $48,250 |
| Deposit in transit | +$6,200 |
| Outstanding checks: $1,400 + $2,150 + $1,200 | −$4,750 |
| Confirmed erroneous bank debit | +$300 |
| Adjusted bank balance | $50,000 |
Check the arithmetic: $48,250 + $6,200 − $4,750 + $300 = $50,000.
The unadjusted cash ledger closes at $51,240. It omits an $80 bank service charge and a $960 automatic loan payment. A cleared vendor check for $720 was entered as $520, leaving book cash overstated by $200.
| Book-side calculation | Amount |
|---|---|
| Unadjusted cash-ledger balance | $51,240 |
| Unrecorded bank service charge | −$80 |
| Unrecorded automatic loan payment | −$960 |
| Correction of understated vendor payment | −$200 |
| Adjusted book balance | $50,000 |
Independently check the second side: $51,240 − $80 − $960 − $200 = $50,000.
The book corrections total $1,240. Post and review those entries, then regenerate the ledger to confirm its closing cash balance is $50,000. The loan entry reduces cash by $960, but its allocation among principal, interest, or other components must follow the loan evidence and accounting treatment; the whole payment is not automatically an expense.
Do not post the $6,200 deposit, $4,750 checks, or $300 erroneous bank debit as new book transactions. In this example, the first two are already recorded correctly and the third is a bank error. Preserve their bank-side support and later clearance evidence.
Keep an exception trail through the following period
A reconciling item needs an identity, amount, reason, source record, responsible person, and expected next evidence. For the fictional deposit, retain the deposit documentation and later bank credit. For each outstanding check, retain its number, date, payee reference, and eventual clearing status.
If an item remains outstanding longer than expected, investigate it individually. A check may have been lost, a deposit may be misidentified, or a supposed timing difference may be a recording error. Do not carry an unexplained item indefinitely under the same description.
Before voiding or reissuing a payment, use the practice's approved accounting and bank process. Avoid issuing a second payment while the first can still clear without the necessary controls. Route unresolved stale-payment obligations to the accountant or appropriate adviser.
Make sign-off reviewable
Give the reviewer the statement, final ledger, reconciliation, book-entry support, and outstanding-item schedule. The ADA recommends separating payable and receivable functions so one employee does not control both sides of the money trail. Apply that principle to reconciliation by assigning an owner or other authorized reviewer who can inspect the original evidence independently. ADA guidance on financial responsibilities
Have the reviewer confirm that both adjusted balances tie, book corrections are posted, and bank-side items are supported. Record the review date and specific unresolved follow-ups. Broader approval and access safeguards belong in the embezzlement-prevention controls.
Retain the completed packet under the practice's accounting records policy. The next reconciliation should begin with that same closing book balance and a traceable list of items still awaiting bank clearance.
