 QuickBooks Online 2023. Bank reconciliation month number one deposits. Get ready to start moving on up with QuickBooks Online 2023. Here we are in our Get Great Guitars practice file. We started up in a prior presentation using the 30 day free trial. We also have open the free QuickBooks Online sample company. If you want the two open at the same time, you can use incognito window. Or you can use another browser. To open the incognito window, you can select the three dots if using Google Chrome in the browser. Incognito window, type into the search engine, QuickBooks Online Test Drive. We're using the sample company to compare the accounting view, the one Get Great Guitars is in, and the business view, the one the sample company is in. You can toggle between the two by going to the cog up top and switch the view down below. We're going to be opening up or duplicating some tabs like we do every time. Right click it on the tab up top to duplicate it. Right click it on the tab up top again to do support accounting instruction by clicking the link below, giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. And then back to the tab to the middle going to the reports on the left and then open it up. One of the favorites, those two balance sheet and income statement. And let's just take a look at where that's located in the sample company. It's over here in the business view on the business overview slightly different location reports. That's where it's at. You know where it's at. This is where it's at. We're where it's at, man. This is where it's at. Tab to the right. Let's go to the reports on the left hand side and then open up the profit and loss. Close up the hand boogie and change the range. We're going from 010123 to 022823. We're going to go to the drop down and take a look at that on a month by month basis, run it to refresh it. And we see Jan. We see Feb. We see the tote going to the tab to the left, closing up the hand boogie, scrolling up so we can change that range. 010123 to 022823. Once again, selecting the drop down, hitting it, but not too hard so you don't break it and months and then run it to refresh it. So we're focusing in on reconciliation. That means we're focusing in on the balance in the cash account in the checking account as of the end of January, 88, 8, 10, 25. That being different than what's on our bank statement here, which is 61, 241, 85. We're going to be working on reconciling the difference at this point in time. And that's the project that we have endeavored upon. So let's go back on over and say that we're going to go to the first tab and open up the bank reconciliation. And that is down on the left. And we're in reconcile. So we started the process last time. We're resuming the checking account reconciliation. By the way, if you were in the bookkeeping view or the other, the business view, it's under bookkeeping. That's why I got those confused. It's under the business view and then bookkeeping. And then you go to reconcile. And there you have it. You wanted it. You looked for it. And now you have it. That's great. So now we're going to go back and we're going to reconcile here. So I'm going to then continue the process, resume the reconciliation. Now note that the data that we entered before, if I hit the edit button up top was the 25,000. That's going to be that kind of issue one up top because it's 30,000 here. That's our beginning balance problem. We'll deal with that later. But let's imagine that that was in balance. If that works for now, because now we're going to focus on the additions. And once I get the additions all in there, which are broken out down below, I would like it to sum up to the total here of the 143 oak 70 85 of the reconciled or checked off additions or deposits to the checking account. That is our focus at this time. The ending balance is going to be the 61 288 145. Once we reconcile that should be our cleared balance down here. And that's the process we're going through. So just a quick recap. This is the statement ending balance minus the cleared balance, which should be equal to the statement ending balance. Once we fix the beginning balance problem, once we enter all the payments or check them off. And once we check off all of the deposits, this is our focus this time to get that deposit number in essence to match this 143 70 85. Okay, so let's do that. So then I'm going to close these up. We've got we're going to sort by date. Now it's easiest to do this by basically just clicking on the deposits side of things. And now we've got all of our deposit information. So note, this is going to be fairly easy for us to do because we set up the deposits in such a way that everything should tie out. Everything should work. Let me give a quick recap of that process. Let's take a look at the at the flowchart down here. The deposit forms are going to be the things that ultimately increase the checking account. But remember you have a couple issues with the deposit forms. Obviously, if you're getting paid with checks, or if you're getting paid with electronic transfers, or if you're getting paid by something like a like a Google or something like that's giving you a payment, then those are going to be deposited in your checking account in the same format as they will be seen on your bank statement. No problem. However, if you get cash receipts, for example, or credit card payments, those can cause problems as well as if you're using an inter platform like a PayPal or a stripe or something like that. Then you've got these issues in terms of you might have the right Indian balance in your account, but you might not have the same grouping as is going to be shown on the bank statement. And that grouping is going to be important because you want the grouping to be the same. So the reconciliation will be as easy as possible. And that's what we talked about every time we said that we say you're at a cash register, for example, you're collecting cash, you're not going to just deposit those sales directly into the checking account in your bookkeeping system, because then you would have a bunch of $5 sales or cash increases, deposits in your checking account. And if you actually physically make the deposit at the end of the day with one lump sum deposit of all those $5 cash amounts, then you're going to have this issue when you reconcile at this point in time, whereas we're going to have these lump sums on our bank statement. But within QuickBooks, we're going to have all these $5 amounts that we're going to have to add up to get to. That's not what you want to see happen. You could have a similar issue if, for example, you have a credit card, a credit card situation. And in that, in that situation, the credit card company is going to group your sales together. They're probably not going to make deposits into your account $5 at a piece. They're probably going to group them together and deposit them. And therefore, you can have an issue again. How do you deal with that issue? That's when we talked about the clearing account, which sometimes used to be called undeposited funds, payments to deposit. You try to work with the credit card company. You try to work with your system for how you're going to make deposits into the checking account, use the clearing account so that you have this added step of putting the money in the clearing account, and then making the deposit so that the grouping matches what's on the bank statement, so that you can make the bank reconciliation easy, basically almost automated would be the idea. You can have a similar issue with PayPal or Stripe when you get those payments. How are you going to get those payments and then pull them into your your accounting system so that when you make the deposit ultimately, it will match what's on the bank statement. So those are issues that you got you got to think about in terms of how your system is set up. Once that set up properly, then it should be very easy to to enter the deposits for most for most companies and check off and do the reconciliation process. If it's not set up properly, you really want to kind of think about how you can get it set up properly because this is a huge internal control. Okay, so let's just give a quick recap of what the bank has on the deposits and how we can kind of tie this stuff out. Note that when you make a deposit, the bank statement has the date of the deposit, of course, and it has the amount that has been deposited. Now the date might be a little bit after like if you deposited cash, it might take a more like three days to process the cash deposit, but it should be pretty close to the date that you entered it into your system. So if I entered in my system, end of the day, cash deposits are 65,000 or whatever. And then I go to the bank and I deposit that into the bank. There might be like a three day difference between what's on my books and what's on the bank book, but the date is quite relevant because it should be quite close. We of course have the dollar amount. The dollar amount is a huge thing to help us to tie out our deposits, because sometimes we don't have any added detail. We might not have anything else other than the date and the dollar amount. And if that's the case, then then we want to make sure that we don't have this issue with our dollar amounts, having like $5 amounts that tie out to the 65,000, right? We want that to be as easy as possible. Now, if you have electronic transfers, then you'll also have oftentimes a memo that comes in through the bank feeds and stuff that will be on the bank statement, which could be an indication or give you the information for who you got the money from like the customer. So that's why these the electronic transfers are nice because they actually give you more of an audit trail, making it easier to do the bookkeeping, making it easier to automate the process in some in some ways and possibly integrate the bank feeds into it. So you got another piece of data contrast that to the expense side of things or the or the decrease to the checking account on the decrease side of the checking account. If you just write a classic old check, then the date is no longer a real as useful of an item because it takes a lot longer for a check to clear. But the check number becomes something that helps you to tie out more closely. And the amount, of course, is still going to be relevant and should help us to tie out. If it's an electronic transfer on the decrease side of things, once again, the date will be much more relevant. You won't have a check number, but you might have that added memo information which would help you to know who the vendor is. Okay, so what our strategy now is to is to always be going from the bank statement to our books, and we're just going to take and tie this stuff out. Now note that if you constructed your your books from the bank statement, you could basically just click all of them off. I could just go boom, just take them all off. But but and just select all of them. Right? I could do that. And it would just tie out. But if you have a full service accounting system, you might not be able to do that. So I'm going to uncheck those. The reason I always want to start from the bank statement is because there could be things on our bank statement. I mean, is because there shouldn't be things on the bank statement that are not on our books. If there are, we're gonna have to add them or see what the problem is. But there might be things on the books that are not on the bank statement. Therefore, when I if I go from the bank statement to the books, then then I should always be able to find what I'm looking for. If I go the other way, I start to get confused and say, Well, I don't see it. Is that is that right that it's not there? Right? If I go this side to the bank statement, it should, it has to be there. If it's not, there's a problem, right? So you can start doing both ways, but you just have to start to get it straight in your head. And then before you do that. So then I'm going to go. So there's the 65,000 boom, checked it off 65,000 added up top, going back on over. I'm just going to make that a color like let's make it like colorize it. And then this one's on 50,000 50,000 is right there. Notice I put it in the system on the second it cleared the bank. It should always clear the bank a little bit later. This is a practice problem. I might have messed up a couple of times, but you would think the bank cannot if the bank has the date of a transaction before you entered it into the system. That's impossible. The bank couldn't have predicted that you're going to do a transaction before you did it, right? You do the transaction and then the bank gets the information afterwards, right? You might you might have constructed your books from the bank statement, which is a different scenario, which means the dates should be exactly the same. But if you're using a full service accounting system, you enter the transaction and then the bank is entering it. You always know the data. You know the timeframe before the bank. So this date should always be maybe the same date, but always before you would think when the bank date is. Okay, so 7570, 7570, boom. And then let's make that green and do one more one more time, one more round. I didn't hear no bell. I don't stop stuff until bells are ringing in my head, which happens quite often. So I stop and start, I stop and start things all the time because bells are going off. But anyway, there's the 20,500. Now you'll note, we have one more over here that is a deposit on our books, but it's not on the bank statement. Is that a problem? In theory, not necessarily, it happened on the 25th. So it should have cleared by now. So I'd be like, what's going on with that? If I pass it, if I entered it on the 25th to the bank and it hasn't cleared, that's kind of an issue. But if I go to my bank statement, because remember, I'm doing this as of the end of January. So I could, so I mean, I'm, but that means I didn't get the bank statement itself until sometime in February. So I could go to my online banking and say, hey, did this one clear in February? If it did, then I'm like, whew, that's not really a problem. It cleared the bank. It just happened after the cutoff date. So I'm not really worried about that one. It's just going to be a reconciling item. It's going to be a timing difference. It's going to be one of those items that shows up here on the reports as an un-uncleared transaction, right, on our my bank reconciliation reports. So so so that's what's so that's fine. So that's going to be the process. So now at this point in time, I've got the 25,000. Doesn't match the beginning balance. But I know that that's an issue we're going to touch on. This one now does tie out the 143.07085 ties out to to this one. So that's right now. So that is good. If I get the deposits, if I get the payments correct, then I should be good, except for that $5,000 difference I have to deal with. Now notice that this number doesn't tie out to what we entered in the system, because we also entered this in the system. But but I'm talking about my cleared balance, the ones that we checked off, the ones that are matching, the ones that are mirroring what's on the bank statement. Now one more thing to point out here before we sign off on this one, the 25,000 here, sometimes you might just have a zero here, like yet you might have entered it as like a zero because you didn't get the beginning balance in there correctly. And then you've got 25,000 as a deposit down here. Then you can just check off the 25,000 in the first bank reconciliation. And you should be good to go, meaning it won't be represented here. It'll be represented over here in the deposits. So but it'll still be represented as long as you note that in the first bank reconciliation. So this number at the end of the day would be the sum we could still reconcile because these two will be kind of mushed together in the same number. And so if you have to do that in the first bank reconciliation, not a problem, you could do that. It wouldn't be the 25,000 or the 30,000 that will fix short at the end of this would be in the deposits, you would just check it off like everything else. And then just note on your bank reconciliation statement. It's the first bank wreck. That's the beginning balance issue that you had to deal with in that way. So that's that we'll do that. We'll do the same thing for the payment side of things. Next time. So I'm going to just save it for later, get some coffee, and then we'll be back for the next round when the next when the next bill fires off in my noggin. So we didn't change anything to the financial statements. So we don't need to run any trial balance. I don't believe at this time.