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Bank Reconciliation PowerPoint PPT Presentation


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Bank Reconciliation. Chapter 4. Objectives. Reconcile your checking Create bank reconciliation reports Find errors during reconciliation Correct errors found during reconciliation Make corrections when QuickBooks automatically adjusts the balance in a bank account

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Bank Reconciliation

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Bank reconciliation l.jpg

Bank Reconciliation

Chapter 4


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Objectives

  • Reconcile your checking

  • Create bank reconciliation reports

  • Find errors during reconciliation

  • Correct errors found during reconciliation

  • Make corrections when QuickBooks automatically adjusts the balance in a bank account

  • Handle bounced checks

  • Reconcile credit card accounts and record a bill for later payment

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Reconciling Bank Accounts

  • Each month, QuickBooks bank account should be reconciled and corrected for discrepancies with the bank statement

  • To reconcile a bank account:

    • Open the account register in the Chart of Accounts

    • Select the Banking menu, and then select Reconcile

    • Check Beginning balance with the bank statement, it should match the bank beginning balance

    • Enter statement date, Ending balance, service charge and Interest earned

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Reconciling Bank Accounts (contd.)

  • In the Reconcile window click on each line to mark it as a cleared transaction matching with the bank statement:

    • Match the deposits and other credits

    • Match the checks and other withdrawals on the bank statement

  • After clearing all transactions matching the bank statement, the Difference field should be 0.00, indicating that your bank account is reconciled

  • Click Reconcile Now

  • If you need to wait until another time to complete the bank reconciliation, you can click Leave

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Click here if you want to see only transactions before the statement ending date.

The difference here must be 0.00.

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Bank Reconciliation Reports

  • QuickBooks creates both a Reconciliation Summary report and a Reconciliation Detail report after a successful reconcile

  • Select Reconciliation Report window is displayed:

    • Select Summary or Detail option

    • Click Display to view the report

    • Click Print to print the report

  • To create bank reconciliation reports at any time:

    • Select the Reports menu, select Banking, and then select Previous Reconciliation

  • If you are using QuickBooks Basic or QuickBooks Pro, you can create Bank Reconciliation reports for the most recently reconciled month only

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Finding Errors during Bank Reconciliation

  • The Beginning Balance Field error:

    • One or more reconciled transactions were voided, deleted, or changed since the last reconciliation

    • A user removed the checkmark from one or more reconciled transactions in the account register since the last reconciliation

  • Incorrectly Recorded transactions

    • Discrepancy between a transaction in QuickBooks and a transaction on the bank statement

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Correct Beginning Balance

  • Option 1: Use the Reconciliation Discrepancy Report

    • Select the Reports menu, select Banking, and then select Reconciliation Discrepancy

    • Review the report for any changes or deletions to cleared transactions

    • Enter the corrections for reconciled transactions using the report

  • Option 2: Undo the Bank Reconciliation

    • Select the Banking menu, and then select Reconcile

    • In the Begin Reconciliation window, select the bank Account and click Locate Discrepancies

    • Click Undo Last Reconciliation

    • When the undo reconciliation is complete, QuickBooks displays a completion message, click OK

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Edit Transactions in Current Accounting Period

  • If you made the error, double-click the transaction in the Reconcile window, make the correction and return to Reconcile window

  • If the bank made an error, enter a transaction in the bank account register to adjust your balance for the error

  • To void a check, double-click the transaction in the Reconcile window, select the Edit menu and select Void Check and then return to Reconcile window

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Edit Transactions in Closed Accounting Periods

  • Enter a reversing entry in QuickBooks using the date of the current bank statement and same account that you used on the original transaction

  • The two transactions cancel each other out

  • Both the original transaction and the reversing transaction will show on the Reconcile window, clear both transactions

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QuickBooks Automatically Adjusts your Balance

  • If the difference is not zero when you click Reconcile Now in the Reconcile window:

    • A transaction is created in the bank account for the difference

    • The transaction is coded to the Opening Balance Equity account

  • To Correct the problem:

    • Delete the transaction that is coded to Opening Balance Equity

    • Undo the Last Reconciliation

    • Perform the bank reconciliation again correctly

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Handling Bounced Checks

  • When Your Customer’s Check Bounces

  • Receiving and Depositing the Replacement Check

  • When Your Check Bounces

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Customer’s Check Bounces

  • Bounced checks are also know as NSF (non-sufficient funds)

  • When customer’s check bounces, add two new transactions to your bank account register:

    • one for the amount of the check that bounced

    • one for the fee charged by the bank

  • To charge your customers a service fee for processing their NSF check, enter an Invoice for the customer

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Receiving and Depositing the Replacement Check

  • Select the Customers menu, and then select Receive Payments

  • Make sure you apply the payment against the original invoice and the service charge invoice

  • Click Save & Close

  • Select the Bankingmenu and then select MakeDeposits

  • Select the check and then click OK

  • In the Make Deposits window, click Save & Close to deposit the replacement check

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When Your Check Bounces

  • Enter a transaction in the bank account register and code it to Bank Service Charges using the actual date that the bank charged your account

  • If your balance is sufficient for the check to clear, tell the vendor to redeposit the check

  • If your balance is not sufficient, consider other ways of paying the vendor, such as paying with a credit card

  • If your vendor charges an extra fee for bouncing a check, enter a Bill (or use Write Checks) and code the charge to the Bank Service Charge account

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Reconciling Credit Cards Accounts and Paying the Bill

  • Credit card accounts should be reconciled every month just as you do with your bank account

  • After the reconciliation of credit cards, QuickBooks asks if it should:

    • Write a check for payment now

    • Enter a bill for payment later

  • If you don’t want to pay the whole amount due on a credit card, edit the original Bill to match the amount you actually intend to pay

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Summary of Key Points

  • Reconcile your checking

  • Create bank reconciliation reports

  • Find errors during reconciliation

  • Correct errors found during reconciliation

  • Make corrections when QuickBooks automatically adjusts the balance in a bank account

  • Handle bounced checks

  • Reconcile credit card accounts and record a bill for later payment

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