 Once the bank reconciliation is complete, we have calculated the adjusted cash balance. In this example, we determined that the adjusted cash balance should be $39,925. However, our cash ledger still shows the unadjusted balance. $39,925 is what it should be, but $37,725 is what it is. In order to adjust this account, we will need to record adjusting entries for the items that reconcile the bookside. Cash adjusting entries aren't too difficult to figure out if you remember the following. Items that are added in the reconciliation process mean a debit to cash and a credit to whatever account the item relates to. Items that are deducted in the reconciliation means a credit to cash and a debit to whatever the item relates to. The first item that we reconciled in the bookside was a bank collection of $18,250. In this case, it related to a notes receivable. So we will debit cash and credit notes receivable for $18,250. The next item is interest earned on our bank account balance. This relates to interest revenue. So we would debit cash and credit interest revenue for $150. The next item is a deduction from cash. It is a service charge. Often service charges are a miscellaneous expense, but I've chosen to use the bank service charge expense. It really depends on the company. So we would debit bank service charge expense and credit cash for $200. The next item is an EFT payment. This relates to one month's rent of a warehouse. So we debit rent expense and credit cash for $12,500. The next item is NSF checks. These are bad checks our customers wrote us. So what's the other account that relates to this? Do our customers still owe us money or did the bad checks erase their debt? Clearly, we're still owed the money. And the account we use when customers owe us money is accounts receivable. So we debit accounts receivable and credit cash for $4,000. The final reconciling item is a book air. In this case, we recorded $500 too much for a payment. So we would debit cash and credit accounts payable for $500. After we post these adjusting entries, you can see the adjusted trial balance for cash is equal to our bank reconciliation amount of $39,925. Finally, do we make adjusting entries for the items that reconcile the bank side? No, we don't. Because we've already recorded these items on our books. It's the bank that hasn't recorded these. And that concludes this short video on how to make adjusting entries for the bank reconciliation.