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Bank reconciliation refers to presentation of the reason for the difference's in the bank statement and the company's own accounting books.
The process has two steps.
1: Adjusting the balance as per the bank statement (Adding any transactions which are in transit, and deducting outstanding checks.
2: Adjusting the balance as per the company Books (Deducting service charges, Adding interest and collections made by the bank.
3: Both Balance should be equal.
4: Preparing Journal Entries.