Bank Reconciliation Month #1 Deposits 9.10

QuickBooks Online 2021 bank reconciliation month one or the first month of the bank reconciliation we’re going to be focusing in on the deposit side of the process. Let’s get into it with Intuit QuickBooks Online 2021. Here we are in our get great guitars a practice file continuing on with our bank reconciliations. So we’re first going to be opening up our balance sheet report and duplicating the tab up top to do so. So I’m going to go up top right click on the tab, duplicate it, then we’re going to go down to the reports on the left hand side selecting our favorite report that being the balance sheet report.


So we’re going to be opening up the balance sheet report range change on the date range up top ending at the a 131 to one a 131. To one running that report, closing up the old hamburger, we’re focusing in here on the checking account, comparing what is on our books to what is on the bank statement, we’re imagining we have then the bank statement, as of the end of the month, it’s going to look like this.



So this is our mock bank statement where we have the beginning balance, the additions, then the subtractions, we then have our ending balance, that ending balance, of course, not timed out to what we have on our books, that’s going to be the process that we’re going to go through now for reconciling the two things we want to pick up when reconciling is one, are there any corrections that we need to be making and two, what are the open items, outstanding checks and deposits that we can then use to for our bank reconciliation to tie out what’s on our books to what’s on the bank.



So let’s go back on over to our QuickBooks, then I’m going to go back to the first tab where we started off our reconciliation process, I’m going to scroll back down to 100%. Go to the accounting tab on the left hand side reconciliation up top. Last time we started the process this time, then we’re going to resume resuming the process of the bank reconciliation we left we left last time in the middle of this got some coffee and whatnot, which you can do and we’re going to come back and then resume I’m going to close up the hamburger up top we’re going to be focusing in on the deposit side of things.



So remember our status here, this item right here, that’s what’s on the bank statement. So our ending balance on the bank statement is going to be this and that. And then we want to tie out the cleared items, the cleared items are going to be these ones, which will be all the things that we check off all the things we check off and the beginning balance, the beginning balance, you know being currently zero, so everything we check off, when it matches that 89 335, then this difference column will be down to zero. And that’s when we’ve done the process of reconciling and then can make the bank reconciliation from it.



So that’s going to be our process, we’re focusing in on the deposits. And I think this is really good tool within the QuickBooks Online, meaning we could just select the deposit items, the items down below, then we’ll just be reflecting those deposit items. So that’s what we’ll do here in selected deposits. So there we have it, the deposits are usually going to be a more straightforward kind of process to be dealing with because the deposits are usually let well depends on the type of industry that we have, that what the deposits may be less, and we might have the dollar amounts to match up with.



And then of course, the dates usually will be closer to the point in time that we actually entered the deposit in our system to the point that they clear. Now when do deposit side of things become complicated, they become complicated when we have a whole lot of little deposits. And that might happen if we have you know, if we’re selling types of things, wherever you’ve large volume of sales that are happening that are going directly into the bank statement, they could be complicated if we have basically check if we have credit cards that are depositing and grouping things into our system into the bank statement in a different way that we’re grouping things in our books.



So if that is the case, then you’re going to have to be working with your credit card provider company that’s helping you there and your bank to line up your deposits there. And they might be difficult if you’re collecting sales items, I’m going to the flowchart on the desktop version just to see this process. For example, if we have a lot of sales on a cash register, we have a point of sale type of process, we’re having a lot of cash sales or whatnot.



And then we’re just entering those directly into the checking account at this point, instead of grouping them and undeposited funds, and then depositing them into the bank account in the same grouping that we expect them to see on the bank statement, which would be the grouping that would be aligning to us go into the bank and actually making the deposit because of course that’s going to be the format that will be reflected on our books. So if you have that type of situation where you where your deposits in the books are different than is on the bank statement.



You can deal with that, of course, then when you do the reconciliation, we’re just going to kind of go through all the deposits and group them together so that they tie out to the item that’s on the bank statement. But it’s tedious to do that, and it’s going to be less likely that you will be able to automate that process. If you do do bank feeds and whatnot.



If you can get things to line up Then if you do link up the bank or something like that, then it could usually pick out the deposit and match out that deposit helping us to do the reconciliation process, you know, automatically or as we go. So, what we’re gonna do is we’re gonna go back here, and we’re gonna say, Okay, this 30,000, that’s kind of like our first deposit right there. Because that’s that beginning balance type of problem. It’s the first bank reconciliation, we don’t have anything on our books in the beginning balance, because it’s the first bank rec.



So we’re going to kind of do a workaround on that meaning, instead of having the beginning balance line up, when we entered the bank reconciliation, for example, instead of having the beginning balance here, if I go to the Info tab, there’s nothing in the beginning balance there, we’re instead just simply going to check it off just as if it cleared down here just to work through that first bank reconciliation. So the first line item we’re looking for is that 30,000 to kind of check off. Now, if if we had the 30,000, when we entered our beginning balances, we could just do that. But the problem is, I’m going to check it off right there it was 25,000.



So we noted in a prior presentation that we’re gonna have a problem with that beginning balance. One is the fact that it’s not there to is the fact that the beginning balance that we put in place, even when checking it off, still doesn’t line out, because we had outstanding checks last time, and we’ll be able to see that here, I could see it right here, I could see that these two checks are probably the one. That’s that $5,000 difference. So that’ll kind of wash out, we’ll see how that plays out.



As we go through the bank, finish the bank reconciliation process, and then we’ll discuss how to deal with that. Once we once we see what it is, we’ll see what the difference is, and what’s the proper way to deal with it, what’s the easy way to deal with it, but not quite as proper way to deal with it, and so on. So then, which is going to be checking off everything on the bank statement to our books.



Now remember, the process you’re looking at is going from the bank statement to the books, this seems like a minor kind of detail. But it’s important because everything on the bank statement, we expect to see on our books, if it’s on the bank statement, it should be on the books because we made the books on our side, and then the thing cleared the bank, right.



So so that means that if it’s on our books, and it’s not on the bank statement, it may then be a timing issue. But if it’s cleared the bank, then it should be in our books unless there’s an error. So that’s the process we want to go to I want to go from the bank checking from the bank to our books, if it’s on the bank statement and not on our books, we’re probably going to have to add it unless the bank is wrong, which is unlikely unusual could happen. Unlikely unusual, however, and then whatever’s left that’s still on our books that we didn’t clear the bank, then that’s going to be our outstanding items if we have any.



And we expect that to be the case, because because we did our books first. And there’s a timing difference, the bank doesn’t know about those. That’s our reconciliation. All right, let’s just do this, I’m looking for that 50,000. Going back over, there’s the 50,000. No problem. So I’m going to go back on over here. And I’m not going to highlight this. And I’m just going to check it off. Now if you have this printed out on paper, then of course, I would just take the trusty highlighter and just highlight it as you go. If you have a very basic bank reconciliation, you could do this quite quickly, if you have a whole lot of transactions just become somewhat tedious.



And you would like to check them off as you go. So that you don’t have to start all over again, it’s worthwhile to kind of do this one time, you do want to reconcile Exactly. If you do not reconcile exactly, then the ability for the reconciliation to give you that internal control that added assurance goes down greatly. Because if there’s any problem or any difference, that could be caused by multiple deposits and multiple checks, if you’re completely right on basically to the penny, then then your your level of assurance is way higher.



So we’re then going to go back and it should be easy to do, because again, we’re just taking in tight and everything off. Does it match exactly, yeah, matches exactly. So we’re just going to be tying everything out. So the next one we’re looking for is going to be that 65,000. So there’s the 65,000, boom, the date is at one one over here, that should be once again close to the date over here, it should be within like three days, you would think because it doesn’t take long for a deposit to clear the bank. And then we got the five, six.



So we’re looking for the five, six, there’s the five, six, we’ve got that and I’m going to highlight that in yellow file. So we’re going to yellow phi that one, highlight it, highlight it, and then we got the 20,500 and the 20,500. There. So there we have it. Now we’ve checked off all the deposits on our side.



On the bake that were on the bank statement to the books, all the deposits on the bank statement to the books we have checked off, I’m going to yellow fly this properly. So there we have it. And if I pull out the trusty calculator here, we got the trusty calculator, I’m going to say that the deposits that we have are the additions are going to be that 141 that’s going to be the sum of these 250 1000 plus 260 5000 plus 256 plus 25.



Plus I’m going to add the beginning balance so that ties out to this 141 one plus the beginning balance 30,000, which I’m going to treat kind of like a deposit on on this first bank reconciliation, since we had nothing in the beginning balance. So then if I go back on over here, we’ve got our deposits at the 16611661. If I subtract this out 166100, we got the $5,000 difference, which, of course, is the difference between the 30,000 beginning balance and the 25,000.



And we caught we recorded here. So we see what that is. And I can see where we’re probably going to reconcile out or play out, if it’s going to be these two items that are going to be items that were outstanding last time that cleared this, they cleared in this period on the bake statement. But they’re not something that we entered in January, because we actually wrote the checks sometime in December. So we will deal with that in a future presentation when we get there. But we can kind of see what is happening with it at this time, then we have this deposit down here, which is on our books, but it’s not on the bank statement. So that typically we’re going to say,



Okay, well, that’s kind of normal, because I would think that we might have put it in our books, and it has not yet cleared the bank statement. So we would expect that to be the case. However, because it’s a deposit, you would think it would clear within a couple days. So the fact that it’s on there at 123, and it has not cleared as of 131 would cause concern. But how would we check it, we can obviously just go on to the bank statement or onto our online banking and see if that cleared in February.



If it cleared in February, then we’re good. It’s just a timing difference. It’s just a timing difference, we might want to ask our bank why it took so long in this case. But if it were closer to the end of the month, and it cleared in February, that’s kind of what we would expect to happen. So this being on our books isn’t wrong. Meaning this being included in this number, if I go back to the balance sheet on our books, it’s adding or increasing our checking account on our books. It’s not on the bank statement here. That doesn’t mean our books are wrong.



That just means we have more information that the bank does not yet have due to the timing difference in the bank statement doesn’t mean that the bank is wrong. Either they didn’t make an error. They just don’t have the information yet. When will they have the information in February. And we can actually check that at the point in time we do the bank reconciliation, because when we do the bank reconciliation, it’s going to be at some point in February, when we do the bank reconciliation for January. So I can go ahead and look that up. I can imagine I looked that up.



And I said that cleared in February, I’m okay with that. So that’s fine that it’s going to be outstanding, it’s going to be a reconciling item. When we do our bank reconciliation, it’s going to be one of the items that is going to account for the difference between what is on the books, the 100 332 50 and what is on the bank statement as of January 31 289 335. So that’s where we stand at this point. I’m going to go back on over and then once again, I’m going to save save it for later. save it for later, and then we’re going to go do some other stuff again. And then we’ll come back and we’ll continue with our expenses side of things.

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