The correct journal entry to reconcile the interest earned on a bank balance is:?

Debit Cash

Credit Interest Revenue

Need to be passed a Reciept, Not a Jornal Entry. 

Cash/Bank      DR

Interest Income CR

If interest not credited to the Account, then need to pass a JV,

Interest Receivable A/c   DR

   Interest Income CR

Don't pass the journal entries to Cash Book.

Interested earned from Bank on Balance held on certain period;

Interest Income is revenue, therefore we shall Credit Income-Statement as INTEREST INCOME

Bank is Crediting your A/c for INTEREST EARNED, Therefore, you need to DEBIT YOUR BANK A/c

Whereas, if it's earned but not received (accrued)

Then we should pass following entry

Debit Interest Accrued A/c (Asset under Balance Sheet)

To INTEREST INCOME  (Income under Income Statement)

Debit Cash, Credit Interest Revenue ,,,,,,,,,,,, 

The corrent journal entry to reconcile the interest earned on a bank balance is:

Debit Cash

Credit Interest Revenue 

Debit Accounts Receivable, Credit Cash