 QuickBooks desktop 2023 bank reconciliation month number two checks and account decreases. Let's do it within two weeks. QuickBooks desktop 2023. Here we are in QuickBooks desktop. Get great guitars practice file. We started up in a prior presentation going through the setup process. We do every time maximize the homepage to the gray area going to the view drop down. We got the hide icon bar open windows list checked off open windows open on the left reports drop down company and financial. Let's open up that P and L doing the change in range in just for the two months of 0101232022823. And we might want to put it on there for the months instead of the totals so we can see it on a month by month basis as well as the total. Let's go to the reports and fonts and numbers changing the font on up to 14 as has been our custom. Okay, let's go then to the reports drop down again company and financial this time the balance sheet that's right the balance sheet. I know what you were expecting something different but no this is going from 010123 to 022823. Once again let's change it from total to a month by month break out and then font in to the numbering to changing to 14 and oh yes K. There's the setup process we do every time although a little bit different little bit of an adjustment just to keep stuff spicy and new here. We're working on the bank reconciliation for month number two which should be similar to months going forward from there once the beginning balance ties out. Here is our amount on the balance sheet our book balance in essence. Let's open up the bank reconciliation by going to the banking reconcile and we've got our ending date. We've got the balance from the bank statement here this being our ending balance and that's it. Let's go to continue last time we checked off all of our deposits. So now we have the 61 to 41 85 beginning balance checking off and the 51 98120 which is checking off as the cleared items. Now we're hoping to get to this number after we go to the decreases which should get us to and must get us to if we get to that number to a clear balance of that that matches the bank statement. 101 590 05 remembering that the clear balance does not represent what will be on the book balance just represents those items that we clicked off checked off to have this difference down to zero. The book balance is this at this point it's the 95779 we might change it to some items that are on the bank statement but that are not on our books but we won't change it to match what's on the bank statement. If there are outstanding items which there will be like outstanding checks and deposits those will be the items unchecked which will be used as the reconciliation items matching or tying out the bank balance and the book balance OK. So we're on the decreases now at this point in time here is our bank statement we're going to be going from the bank statement to the books remembering that when we're looking at decreases if we have checks that were actually physically written checks. We got the check number to help us out which is nice and the amount the date will not be as useful in that event because it could take a long time for checks in essence to clear if however they were electronic transfers. Then we would have the amount and we would have the date the date being more relevant in that case because the electronic transfer should happen faster and we might also have the memos that could be useful to help us to figure stuff out as well. If we have checks then we could go to the online banking and look at the look at the check as well and get some more detail in that way if we need to too. And also note that especially if you're dealing with checks if it's in your bank statement by date cleared then it might be in a different order than when we entered into the system because again the checks might not clear in the same order as they were written. Alright so we're looking for the three five seven two seventy so let's do that we're going to go back on over three five seven two seventy. Notice that this check was written in January and we're clearing it in December so that's kind of what we I mean I'm sorry we're clearing it in February and we would expect that to basically be the case if I was look at the prior bank reconciliation report. And I was going to go down to those unclear items these are the items that had not yet cleared we would expect them to clear in February generally so that's what we would expect to be happening and in this case of course that is what's going on thus far so this one I'm going to check it off. Let's go ahead and say highlight and check it off and notice it cleared on two two and we wrote it on one thirty one alright next one is four ten and that's on one zero one zero is the check number so one zero one zero four ten that also one that we wrote in January clearing in February. That's good so we're going to say check it off and then we've got the one thirteen one eight five six so one thirteen one thirteen is the one eight five six forty that's the payroll check it looks like so that looks good done and done. And then we've got the two hundred on two six let's do two at a time two hundred and one thirty so two hundred and one thirty boom bam those are done I did two things at one time did you see that look at me look at me I did two things at once. And then this one's on ten sixteen one three five eight seven three so we've got the one three five eight seven three ten sixteen so let's check that one off we've got the one eighty ten eighteen so we've got the one eighty that looks good notice we skipped one that's could quite possibly happen so that's okay we're going to say boom we've got the ten twenty one four sixty eight ten twenty one. Four sixty eight looks good going back on over and saying that one is good and then we've got the ten fifty six forty I'm not always going to do two at a time right there but then I thought no I'm not ready my I'm not ready for my head's not up to see I got that one wrong even. I couldn't even ten fifty six this one and then the last one let's make that one green don't get ahead of yourself. Patience concentrate focus there's the ten eighty ten eighty ten twenty four boom all those have been founded so now these two aren't going to be on there so the five hundred and twenty I don't see those so now there's something on the bank statement that's not on our books. Does that mean the bank statements wrong no the bank statements probably right they charged me a fee and we had a withdrawal I took that money out I've made it okay so now I'm going to have to add them to our books. However these items that are on our books which are not on the bank statement are going to be those items were outstanding and some items we might expect that to be the case. These ones this one this one this one and this one and these two down here look fairly normal because they were written at the end of the month. This one however was it written at the end of January and still hasn't cleared by the end of February. So I would be more concerned that possibly this one is an issue possibly that's I've duplicated that if there's some kind of problem which are the types of things that can fall out and be seen within the bank reconciliation. If it's a problem I can think about how am I going to deal with it can I void it or whatever from that point going forward. Noting that I have to be careful about doing something like voiding the transaction if it was something that was done in a prior period. So I want to be mindful of that but those are the kind of things that the bank reconciliation will help us to find and determine if I look at the bank reconciliation or the bank statement. In other words if I go into the online banking account for example and I see that these items have cleared in March then I'm OK with that. I say OK they were outstanding. Those are my timing differences. I'm not having any problem with them being outstanding. They're just timing differences and then they will be the reconciling items on the banks reconciliation report when we reconcile. But now we're off by the 520 and that's because we have to add this item and this item into the system. So let's do that now. I'm going to do that by going to the list dropdown. Let's go into the chart of accounts and just open up the good old check in account and we'll just add those two items. So one was a withdrawal again. I'm going to add it as of the end of the month on the 28th let's say and so I'm not going to I'm not going to have a number. I'm just going to keep it there. It was from the owner. I can probably put the owner as the as that but I'm just going to not do that. And we're going to say that it was for five hundred dollars five hundred. Now last time we talked about the idea that if money is taken out from the business we would like to assume and I'm imagining we're a bookkeeper for like somebody else right now and you're trying to come up with a system that will work as you're working with them as a client. You basically want to say hey look if you're pulling and this will be the same if it was your own business as well. If you're pulling money out of the company as cash then I would like to be able to assume that to be a draw because there's no other paper trail with it. So I'm going to assume it's a draw if it's not a draw if they're pulling money out as cash and spending cash on business items. You want to recommend generally against that because we want the audit trail for legitimate expenses because those are basically write off for taxes is one reason we want that. And I want to be able to verify the account that it went to for bookkeeping purposes as well as if we got questions about taxes that you actually have an audit trail about them right so that's where we want the audit trail. So so last time we put it to miscellaneous expense which is kind of a red flag in terms of taxes and whatnot. This time we're going to assume it is a draw. So if money was taken out as a draw if I go back up to the balance sheet. Notice it's not going to go on the income statement but rather it's going to go down here into the equity section. We could put it into one of these equity accounts like net income but typically I'm not net income owner's equity but oftentimes will create another account that will represent the draws the money that we're taking out of the business as opposed to it going on the income statement or profit and loss as we did last time with the expense. If we put it on the income statement as an expense it's going to decrease net income which isn't quite proper if we do our taxes and we have this huge amount in miscellaneous expense and we get audited for example. And they find that those are all out of taking money out of the company then we're going to be in trouble for doing that because expenses are good for taxes or deductions are good for taxes and we would have deductions that aren't legitimate deductions in that event. Also note that if you're spending money on personal stuff then you could just write those off to draws as well. So if you spend money for a vacation out of your business account then you could try to track that in your business account and just write that off directly to an equity account as opposed to an expense account. Okay so that said let's go back on over and say we're going to make a draws account where they might have one already where's my checking account. So I'm going to put this into the draws account let's see if they have one draws owner draws boom. QuickBooks already set one up for us. If they had not set one up just note that if I go into the lists and the chart of accounts you'd want to set it up as an equity type of account for a draw. Note that draws are kind of similar to dividends for a corporation although the dividends have to go out kind of evenly there's some restrictions in terms of how you're going to be distributing the dividends because they should go to the shareholders evenly and so on. But in any case draw here so we're going to go back then to the checking account also note that if it was a partnership then you'd have to track multiple capital accounts and you'd have to have possibly draw accounts per partner within the partnership and what not. But in any case we're going to take it to the draw and say record it boom it's been recorded and if I go to my reconciliation then I should have that 500 right there. This is the draws one not the staples thing and then I have also the bank fees of $20 fees of $20 back to the register put in the fees of $20. Okay they just took my money for $20 I should put the bank here I'll just keep it blank though I should put the bank but I'm going to keep it blank. How about that as a poet and I know it I know it I know I'm a poet. Anyways this is going to go into the service bank service charges boom and record it bam and then back to the reconcile and if I check off that last one we've got this down to zero at this time so notice it mirrors exactly what's on the bank statement. So the cleared items 61 241 51 981 20 11 633 matches what we have here 61 241 85 51 981 20 11 633 that means the cleared balance is one 015 90 05 which is showing here which matches the statement balance that does not match however still even after entering the items that are on the bank statement that is not on our books the balance sheet or book balance amount which we can see is at the 95 259 07 due to the fact that we have items in our books that have not yet cleared the bank one of them an old item that was that was put in place in January still hasn't cleared that's a little bit troublesome but we can check that out and see if it's legit these are the outstanding items that that are going to be part of the reconciliation tying out the book balance and the bank balance when we do the report but we're not going to press the blue button yet. We're going to do it next time and then we'll go over the report when we press that blue button just know that you don't want to to reconcile until you get that to zero note that it has to work you have to be able to check these off so you should be able to get to a point where that's at zero especially if you don't have the beginning balance problem if you're beginning balance ties out then you have no real excuse to get things to work to make that exactly zero to make your bank reconciliation have an actual impact of an internal control as it should have if that thing is anything other than zero your internal control not just only over the bank balance but over all these transactions which have an impact on all the other transactions in the accounting cycle due to the double entry accounting system you have far less assurance if that's not zero although you could force it to work but you don't want to do that okay well hit the blue button next time for now we're going to leave we're going to get more coffee until we got and then we're going to come back and we'll finish it up and look at the reports.