reconciliation

How To Make Bank Reconciliation

How To Make Bank Reconciliation

 

To start, I’ll click on the gear menu located at the top right corner of the screen. Then, under “Tools,” I’ll select “Reconcile.” Next, from the drop-down menu, I’ll choose the specific bank account or credit card that I want to reconcile. Let’s say I want to reconcile my Chase bank account ending in 8145.
Now, I’ll bring a bank statement onto the screen. Keep in mind that every bank has a different layout, but for demonstration purposes, I’ve created a sample bank statement. Essentially, the reconciliation process involves comparing the bank statement with the transactions in the system.

 

I want to ensure that the beginning balance, which is already in QuickBooks, matches the bank statement. In this case, the beginning balance is $17,430.51. We need to make sure it matches the balance on the bank statement. Once we verify the beginning balance, we can move on to the next step.

Next, we need to enter the ending balance from the bank statement. Depending on your bank statement, the ending balance will be different. Enter the ending balance in the designated box labeled “Ending Balance.” The ending date should be the last date of the current bank statement you are reconciling. For example, if you are reconciling the January 2024 bank statement, the ending date would be 01/31/2024. QuickBooks will display the previous reconciled statement as December 2023.

Once you have the correct ending date, ending balance, and beginning balance, click on “Start Reconciling” to proceed to the reconciliation screen. However, it’s not as simple as selecting “Select All” and expecting it to work. If you only use bank-downloaded transactions in QuickBooks, they may auto-reconcile. But in this case, assume that all transactions were entered manually.

To ensure the accuracy and completeness of the information, check the box for each transaction that appears on the bank statement. You can have QuickBooks on the right side of your screen and the bank statement on the left. This will make it easier to follow along. Physically check off each transaction on the paper bank statement. You can also use a PDF software’s highlighter tool to mark the transactions on the digital statement.

Go through the process of checking off each deposit, expense, and check. Once you have marked everything off, double-check that all the transactions on the bank statement match those in QuickBooks. The difference should be zero if everything matches.

If there are missing transactions on the bank statement that don’t appear in QuickBooks, you will need to find those transactions in QuickBooks and determine if they were categorized incorrectly or not entered at all. This is your opportunity to enter them into QuickBooks.

If you come across duplicate transactions on the bank statement, delete the duplicates from QuickBooks. Ensure that you are only keeping one instance of each transaction.

Sometimes, you may notice transactions in QuickBooks that do not appear on the bank statement. These could be outstanding checks that haven’t cleared yet. You will need to wait until the next month’s bank statement to see if these outstanding checks are included. In the next reconciliation, you can then mark them as cleared.

Once you have gone through all the transactions and made any necessary adjustments, the goal is to bring the difference down to zero. Click on the “Finish” button to complete the reconciliation.

After finishing the reconciliation, you can view the Reconciliation Report. This report can be printed or saved as a PDF for your records.

Reconciling can become more complex in real-world scenarios. There may be more missing transactions, duplicate transactions, or transactions with dollar amounts that don’t match. You may also have to match deposits in QuickBooks with multiple invoices and payments. These situations require additional steps, which will be covered in separate videos.

In summary, reconciling involves matching your QuickBooks records with your bank statements or credit card statements to ensure all debits, credits, beginning balances, and ending balances align. This process will make your QuickBooks experience more enjoyable and help maintain accurate financial records.

 

 

 



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