Daily Operations -- Reconcile Bank Accounts

Click a link below to view the other sections in Receivables:

• Transfer Funds
• Record Electronic Funds
• Voiding Checks and Receipts

Return to the Daily Operations page here.

Reconcile Bank Statements

This trouble-shooting guide will help you successfully reconcile your statements from the bank with your accounting records.

Use Bank Accounts/Reconciliation

Use Bank Accounts/Reconciliation to reconcile your company books with your bank statements. You can reconcile any or all of the bank accounts that you set up in the Configure/Bank Accounts window. When you select a bank account, the system provides a list of unreconciled deposits, a list of unreconciled withdrawals, a window for making adjusting entries to general ledger accounts, and the period ending balance for the account being reconciled. The system displays unreconciled transactions affecting the bank account whose transaction dates or posting periods fall in or before the posting period associated with the date you enter at Statement date: journal entries, bank transfers, checks, deposits, custom journal entries, and transactions from anywhere else in the system you can specify a general ledger bank account. If the effect of a transaction is to increase the account balance, it is displayed as a Deposit. If the effect is to decrease the account balance, it is displayed as a Withdrawal.

Bank reconciliation involves two interacting phases:

• Reconcile 21st Century Accounting bank account transactions to bank statement. In the Reconciliation window, mark all bank transactions that appear on your statement from the bank as "cleared" and enter all adjustments (such as bank fees and interest) that are on the statement but not entered into 21st Century Accounting yet. This phase is complete when the Statement opening balance plus Total cleared amount is equal to the Statement ending balance.
• Reconcile bank balance to book balance. The balance in the account according to the bank and the general ledger bank account balance should be equal when the first phase is complete. Any discrepancy indicates that some transactions that will never pass through the bank have affected the general ledger bank account. You can press the Finish Later button, make journal entries to correct the G/L bank account, and return to complete the reconciliation.

Reconciling Deposits and Withdrawals

Click the Deposits tab to mark each deposit and click the Withdrawals tab to mark each withdrawal as appearing on the bank statement or as still outstanding. Reconciliation of deposits and withdrawals is noted in the records for those transactions.

Entering Adjustments

You use the Adjustments tab to enter miscellaneous transactions that appear on your back statement but have not been entered into the system, such as electronic transfers, fees, and dividends. Adjustments entered in the Reconciliation window are posted to the bank account being reconciled and to the general ledger accounts you select as offsetting entries to the entries to the bank account being reconciled. You enter increasing adjustments, such as dividends, as positive amounts and decreasing adjustments, such as fees, as negative amounts.

Reconciliation and Credit Card Transactions

The system keeps a record of all credit card transactions in a separate credit card journal. During bank reconciliation, you can use the Adjustments tab to reconcile deposits from credit card companies that are reported on your bank statement but have not yet been recorded in 21st Century Accounting as bank deposits. Select the general ledger account that is associated with the credit card account as the offsetting entry for the adjustment, assuming that you posted the sale to the credit card account when you entered the sale invoice. (Alternatively, you may have entered credit card receipts as deposits using a custom cash receipts journal in the Deposits window. In that case, the credit card receipts already appear in the Deposits pane.)

Resolving Discrepancies

Transactions you entered in 21st Century Accounting that are not truly bank transactions — for example, journal entries involving 21st Century Accounting bank accounts that don't pass through your bank as deposits or withdrawals — will not, of course, appear on the statement from the bank. They WILL be displayed during 21st Century Accounting bank reconciliation and they will create discrepancies. We recommend that you make journal entries to reverse their effect on the general ledger bank account, leaving the general ledger bank account "pure" — so that the 21st Century Accounting general ledger bank account reflects only the transactions that actually pass through the account at your bank. Buttons

• Print. Before you press the Finished button to commit the reconciliation, you can use the Print button to print the Reconciliation Report. The report shows the cleared and outstanding withdrawals and deposits, the adjustments you have entered, and the various balances shown in the window at the time you print the report. You can use this report as a reconciliation record or as a troubleshooting aid.

  
  You can also print the Reconciliation Report from the Bank Accounts/Print menu.

• Preview. Use the Preview button to display the Reconciliation Report. The report shows the data above, just as you have entered it into the Reconciliation window at the time you preview the report. Preview is useful as a troubleshooting aid.
• Finished. Use the Finished button to commit the data to your books when the reconciliation is complete. You must complete reconciliation between the Statement opening balance and the Statement ending balance (that is, you must reconcile items on the bank statement with the bank-account-related items maintained by the system) before you can "Finish" the reconciliation. The system allows you to "Finish" with a discrepancy between the Adjusted bank balance and the Book balance.
• Finish later. Use the Finish later button to save your work before you've completed the reconciliation. The next time you select a bank account associated with an unfinished reconciliation, the Reconciliation window displays the reconciliation-in-progress and gives you an opportunity to continue working on it or to “throw away” the unfinished reconciliation and start over.