 wrote it on February 20th. It cleared on February 21st. These are deposits. We would expect them to clear within three days. Realistically, at this point, probably sooner than that, probably like a day. They should be in there if they're a deposit. Checks on the other hand, typical, to have them be longer than that. Here's the 510, here's the 510. So we've checked all those off. Let's take a look at the other side of it. And we have the check. In this case, it cleared on 2-2. Check number 5005, or 1005. And in this case, we wrote it on January 23rd. Notice we have a longer time frame between when we wrote it and when it clears. That's gonna be typical with checks. If checks are outstanding for a longer time frame, not a problem, usually. That's usually normal. So then we're gonna have the 1002 here. We wrote it on the 31st. It was outstanding as of the end of last month. It now has cleared in this month, in February. And then we have a check that we wrote for 75 on February 10th. It has now cleared on February 13th. Here's a check for 250. And we wrote it on February 12th. It's cleared on February 15th. So we've tied everything out now. Now we've found everything on the bank that we could on our books. If there's something, except for, of course, these two transactions down here, the A and the two, those are not on our books. And the general rule is gonna be this. If it's on the bank statement and it's not on our books, then we probably have to fix our books. Now the exception to that is what often people think of the reason of doing a bank reconciliation. And that is what if the bank made an error? That does happen. I've seen errors before, but the bank is pretty good at it. So they don't often make an error. What happens a lot more often is that there's transactions on the bank that we have to record. And that's the case with, of course, these two transactions here, the 80 and the two, 80 represents something that maybe we went to the bank and took a withdrawal and never came home and recorded that or to the office and recorded that withdrawal. And therefore, obviously it came out of our checking account. Therefore, it should be reducing our checking account. It is reduced from the bank's side. We haven't recorded it on our side. Or something like bank charges, if we bought checks or if we just had a non-sufficient fund charge, something like that, then of course the bank will just take it out of our account. We wouldn't even know about it. We don't know about it until we get the bank statement and say, okay, they took in this case $2 for just surface charges that we're gonna have to reduce from our side. Also note that if we're a small company, some small companies may do a lot of stuff basically on a debit card or even individuals may do a lot of stuff on a debit card and actually record it monthly, meaning they're gonna get the bank statement, look at all the charges they have made and basically record the transactions from the bank statement to the books in that fashion. Now, the other side of it is if we have something on our books that's not on the bank statement, such as these three items here. So we have these two checks and this item, this deposit, then that difference is probably due to timing differences, meaning we wrote these checks clearly and we made that deposit, but they have not yet cleared the bank. The bank hasn't had time to process those because these two checks have to once again get picked up by the recipient of the check and they have to deposit it and then tell our bank the deposit should take one to two days, but this was deposited it on February 28th. So what we're gonna do is we're gonna say, okay, here's these two checks. If we're concerned about them, then what we wanna do is call the bank maybe because note when we're doing this process, it's gonna be even though it's as of the 28th of February, it's gonna be sometime in March because obviously we got the statement sometime in March. And so we can call the bank, we can say, hey bank or go online and say, hey, did these two checks clear sometime in March? And if they did, that's what we would expect and we say, okay, we're just gonna record that's a difference, that's a timing difference, we're good. Same with this deposit, we're gonna, it's sometime in February now, we can call the bank if we're concerned about it and say, I would expect this deposit to have cleared sometime between before March 3rd, is that the case? If it is, then as of this time period, we just record that as the timing difference. So first let's take care of these two items. We noted that these two items were on the bank statement, but they're not on our books. So what we're gonna do is just make the adjustment, let's just make the adjustment for those two items, we need to fix our books, meaning that if we took out $80 here and we drew it out of the account and just got cash for it and we didn't record it in our books, then what's gonna happen is cash is gonna have to go down by that $80. We can see that cash has a debit balance, we need to make it go down, we're gonna do the opposite thing to it, therefore that would be a credit. So that's gonna be this credit here, we're gonna credit cash by the $80, which will reduce the cash account. Then we're gonna have to record some other side of it. So we know that cash has to go down, what about the other side? Most likely it's gonna be some kind of expense. If we took something out in cash and didn't keep the receipt, that's, you know, we should keep the receipt probably, but if we took it out and we don't know what we spent the cash on, then we're gonna have to put it somewhere, one place we could put it is probably the miscellaneous account here. So we're probably, we could put it in the miscellaneous, it's gonna be some type of expense, most likely, and expenses have debit balances, and once again they only go up, so we're gonna make it go up by doing the same thing to it, we're gonna debit the $80 expense. If we record that then, what would happen is the expense goes from zero up to 80, it brings net income down, because net income has a credit balance, it's the 50 minus the 80 would bring it down here. Also, of course, the cash has a debit balance, it would go down by that 80 and bring the cash balance down, that would put it back in balance, and there's what the effect on the net income would be. Once again, this is income, not a loss. The other side of it, if we had a bank charge, this would be also something that the bank would record that we wouldn't know about until we got the bank statement. So the bank took the money out, if there's a non-sufficient fund, if they charge us a late fee or something, then we just get it and we go, okay, we're gonna have to record that, we're gonna have to reduce our cash account. Once again, cash has a debit balance, we're gonna do the opposite thing to it. Therefore, we're gonna credit cash, so we know that has to happen, so we're gonna go ahead and credit cash. What's the debit gonna go to? What's the expense account? Probably gonna be an expense account. I personally like to make an expense account called bank service charges, so I like to record what the bank has taken out in a separate account. It is up to the bookkeeper to do that if they want to or not, because note that it is probably gonna be a small amount, so hopefully the bank's not taking a lot out. So since the amount some people might say is immaterial,