How to do a three-way reconciliation, step by step
This walkthrough uses Tiesheet's fictional sample — load it with Try the sample on the home page to follow along.
1. Adjust the bank balance
The October statement ends at $18,388.00. Check 1005 for $2,500.00 (written October 29) hasn't cleared, and a $2,200.00 retainer deposited October 30 isn't on the statement yet.
| Statement ending balance | $18,388.00 |
| + Deposits in transit | $2,200.00 |
| − Outstanding checks | −$2,500.00 |
| Adjusted bank balance | $18,088.00 |
|---|
2. Take the trust ledger balance
Every receipt and disbursement recorded for the account through October 31 adds up to $18,100.00.
3. Add up the client ledgers
Alder $3,000.00 · Birch $0.00 · Cedar $3,000.00 · Dunmore −$100.00 · Ewing $2,200.00 · Ferris $10,000.00 = $18,100.00.
4. Compare
Book and clients agree, but the adjusted bank balance is $12.00 lower. The statement has a $12.00 service charge that was never recorded in the ledger. Record it (many firms keep a small amount of their own money in the account for exactly this — see bank fees in a trust account) or ask the bank to move fees to the operating account.
5. Look at the client ledgers, not just the totals
Dunmore is at −$100.00: $1,600.00 was paid out against a $1,500.00 deposit. That's $100.00 of other clients' money, and it has to be fixed even though the totals agree. See negative client ledger balances.
6. Sign and keep it
Print the report, have it reviewed and signed, and keep it with the bank statement and ledgers for as long as your rules require.
Last reviewed 2026-10-27. General information, not legal or accounting advice — your state's rules decide how trust accounts must be kept and reconciled.