 QuickBooks Online 2024. Bank reconciliation month number one deposits. Get ready and some coffee because we get things done on schedule with QuickBooks Online 2024. Here we are in our Get Great Guitars 2024 QuickBooks Online sample company file we set up in a prior presentation opening the major financial statement reports as we do every time. Reports on the left in the favorites right click in the balance sheet to open link in a new tab right click in profit and loss to open link in a new tab and right click in the trial balance to open the link tabbing to the right the hamburger needs to be closed we're going to change the range 010124 tab 022924 tab let's do the drop down on the month by month and run it and then we'll tab to the right close up the hand buggy and then change the range 010124 tab 022924 tab want to see a month by month side by side once again refreshing the report tabbing to the right first a word from our sponsor yeah actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us but but that's okay whatever because our merchandise is is better than their stupid stuff anyways like our accounting rocks product line if you're not crunching cords using excel you're doing it wrong a must-have product because the fact as everyone knows of accounting 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making it more difficult oftentimes than the following bank reconciliation so noting that we've noted that we're going to move forward with the normal bank reconciliation process starting with the deposit so we're going to go over here in our bank statement the bank statement has an ending balance of the 61 241 85 our book balance has 88 810 27 so now we're going to do the reconciliation process to do that let's go to the first tab go down to the transactions this is where i like to do it and then remember the bank transactions are over here we'll talk about bank feeds more in a future course or section they can help and be part of the reconciliation process but are not in of themselves the bank reconciliation let's go to the reconcile tab and we're choose we chose the checking account last time and started the reconciliation process if you haven't started it then you're going to have some beginning numbers to fill let me show you what those look like we're going to go into the resume the bank reconciliation and then if we have the edit info up top this is that beginning balance information or that beginning information we had zero for the beginning balance we noted that that's a problem because we had 30 000 over here so we're going to have an issue with that we're going to deal with that later we're just going to move forward for now 61 241 that's the ending balance that we pop we put in manually we just typed it in there and then the cutoff date 131 24 that's the cutoff date of our financial statement and then we had nothing that we're going to enter a transaction for these are kind of like we talked about before i don't like legacy things i don't think most people use them anymore because if you have the bank feeds you will have recorded them so i basically ignore this stuff and if i need to record something i will record it myself so let's go ahead and close it recalling that up top i'm going to uncheck everything down here we have then the comparison of the statement ending balance which we just typed in there and the cleared balance these two need to be exactly the same in order for the difference to be zero allowing us to properly reconcile without entering an entry an adjusting entry which you don't want to do because it'll really lower the quality of your bank reconciliation if you do that so so we noted that the beat that this cleared balance now is comprised of the beginning balance minus the payments and the deposits the beginning balance is a problem because it should be populated with the cleared balance on the bank statement due to it being there from the prior period it's not as we discussed before for multiple reasons one quick books just didn't put it in there because of the way we put the beginning balance on the books or something and two even if it was there it's at 25 000 instead of at the 30 000 so i'm going to deal with that later first i want to just think about the deposits now if we put the deposits in place i should get to an ending deposit number that should total what's on our bank statement and the deposits should be easy for most people because the general idea would be that if it's on the bank statement it should be on our books right because the bank statement usually is not going to be wrong if it's not on our books and it's on the bank statement it's likely that we're going to have to add it to our books if it's on our books however but not on the bank statement then it might be the case that it's still okay because it's an outstanding deposit even with electronic transfers if we make the deposit on our end it might not clear the bank for a few days so we could have some outstanding deposits that we know will clear because we can check the bank account after the cutoff date and see that they are outstanding if that is the case then they're going to be a reconciling outstanding item in the current period now a few things to note here sometimes people have problems with the deposit side of things because what happens is they're going to say okay what if you had 65 000 over here and then on our side we saw deposits that i'd have to check off three different things that add up to 65 000 that could happen and and that would if that does happen that would be an indication that you don't have a very good or you could probably improve upon your your bookkeeping system and why would that be the case if i if i go over to my flow chart over here this is a desktop flow chart that we're using for the online account just to see the flow of the forms when i'm looking at the revenue cycle uh here this is usually the cycle that's going to end with some kind of deposits increasing to the checking account due to goods and services provided to customers then the easiest system i would have would be one in which there we have like gig work so that a deposit was just made into the system by like youtube and we wait till it clears the bank and then we record it with a deposit form in that case we're not going to have any differences in our books than what's on the bank because we made our books from the bank but if we're at a cash register situation we could have an issue because in that case we want to record the sales at the cash register as they are made and might be receiving multiple forms of payment such as cash such as checks such as credit cards now if we're getting the payments all the time in the exact same format as they will be showing on the bank statement then we can deposit the sales receipt directly into the checking account as though it's a deposit but oftentimes that won't be the case at least for some types of payments such as credit cards and cash for example so for those items if we use the sales receipt to deposit them directly into our bank account it's going to be a problem for reconciling because the bank isn't going to have each individual sale deposited in that way instead they're going to have a grouping of all the cash that you deposited at the end of the night as one lump sum or all the payments that the credit card decided to group and possibly take a fee from that they then put into the checking account as one lump sum that's why you need to use that clearing account that we talked about in order to in order to take it in and out of the clearing account to make the deposit in the same format that it's going to be appearing on the bank statement so if you find yourself here we're at the reconciliation and it's like okay now I have to check off multiple deposits on my side to tie out to one deposit over here on the bank statement then you're gonna have to do what you have to do here and then going forward fix your accounting process so that so that that you're grouping your payments here on the sales receipt into the clearing account and then taking it out of the clearing account and putting it into the bank and the same format that will be on the bank statement so let me just show you that one more time if I go to the balance sheet here this is the clearing account so when you make sales it would go into here and if I go into that account you can see that it's going to go it's going this account is going up with the payments these are the payments on the invoices from customers and then it's going up with sales receipts the transactions where we get money at the point of sale at like a check cash register and then it's going down when we deposit transferring it out of this account into the bank account as we transfer it out of this account to the bank account we can group multiple sales items so that it's deposited at one lump sum into the bank account if there were fees such as credit card fees you can go down here and say that you had bank I'm not going to record this but bank service charges and say that that was removed so that the net amount that hits your checking account will match what's on the bank statement if it doesn't again you're going to you're going to end up with some messy reconciliations all right I'm going to close that out do you want to leave without saving I'm going to say yes and go back on over now considering that that that is all situated then it should be really easy but let's consider what the bank knows about if for example you're using bank feeds to help you with the bank reconciliation or possibly record the transactions when we're looking at the deposit side of things if you just deposit cash into the checking account you're at the register you take the money you deposit it into the bank at the end of the night what does the bank know then they only know the lump sum of the deposit and the date that you put the money into the bank so if you pull and use bank feeds that's what you're going to have to tie into those two amounts it's not going to you're not going to know like the customer or any other detail just those two things right if on the other hand it's an electronic transfer you're getting paid with electronic transfers of some kind then the bank is going to know the deposit amount it's going to know the date of the transfer which will typically be pretty close to the date that the transfer like was facilitated right and and it might have in the memo information that can help you to determine who gave you the money which gives you a little bit more information to do the reconciliation process so also just realize that these dates here are always going to be either on the same day or most likely after the dates in our system if we're using a full service accounting system because a full service accounting system would be one in which we make the deposit on our end record it and then we use the bank feeds or bank reconciliation to match to the to what's on the bank side and it takes a few days even with an electronic transfer for for our side to clear the bank so we would expect the date for the deposits if they were electronic transfers or even if they were us depositing money directly into the bank to be close but possibly not exact to the date in our system and it's always going to be a little bit later on the bank side than our side if that's not the case in our practice problem it's because you know it's a practice problem so bear with us on the practice problem so that's going to be the general idea and we're just going to take and tie these out now if I go back on over here we have our filtering options so so we have some filters in place notice that we have the information that nothing in our system after uh January it's not showing us the February transactions that makes sense because we don't want to so if I select the filter we can see our filters goes up through January that makes sense because uh if we entered something in February there's no possible way that the bank would would have a transaction before we entered it they would have to read our minds and enter the transaction first so there's never going to be a transaction in theory in February unless there was a date problem in the data input that should have that's going to clear in January right there's that that can't happen because so so that means that we can pretty much always have this end date in place as of the date of the reconciliation and not take into consideration transactions happening after the cutoff date we also have these filters here that allow us to basically focus in on the deposits or the payments in our case we're going to be looking at the deposits you might be able to hide the screen up top which gives you a squished up look which is nice so we can kind of zoom in a bit and then we're just going to take and tie each of these out it's always useful to go from the bank statement to the books because remember this seems simple but but it actually gets a little confusing we know that the things on the bank statement have to be on the books the things on the books don't have to be on the bank statement therefore go from the bank statement to the books right so here's 65 000 here and then here's 65 000 here boom check those two off you could see that it increases the deposit amount impacts this difference category and so then i'm going to go back on over here and i'll highlight this and and make it make it green and i'm going to i'm going to take this one and say i'm over here i'm going to make that green can i how do i make it green boom i know there's a way there it is okay so there's that one and then i'm going to go back on over and say okay the next one i should be going from the bank to the books the next one is 50 000 on five one so then i'm going to go over here and say okay there's the 50 000 it cleared here on i'm sorry five one one five i think i got it backwards sorry about that that half i do that quite often so here's the 50 000 so we're going to say all right there's the 50 boom that's done and then on 757085 on 123 so 757085 that's why i like accounting by the way because if you get things there's a there's a double injury accounting system that gets solves your backwards problem when you see things backwards 127 124 20 500 so then we're just going to go 20 500 120 it went in our books before it cleared the bank so there it is so we're going to say boom and that's it all right so now we can just take that one off and and so notice what happened here is we've got everything on our on our bank statement we have found somewhere in our books however we have one that of deposit in our books that was in january that is not on the bank statement so so then the question is that a problem well it's something that we would want to look into clearly but it possibly isn't a problem because maybe i entered that transaction on our side and it hasn't cleared the bank yet how can we solve for that well we can go to our online banking system and basically and just see if it cleared in february if it cleared in february then it doesn't mean i'm going to check it off in january it means that that's an outstanding item as of the cutoff date of january 31st it's one of the reconciling items it's just going to be a timing difference so in that case we're going to say well that's good no problem that's just going to be one of our reconciling differences now if i add these up now it comes up to our deposits we have four deposits for 14370 85 that should tie out to what we have here 14370 85 perfect okay so now also note that the beginning balance isn't working right now so if i if i was to go back on over here on the first bank reconciliation this is a deposit so what we're going to end up doing at the end is just adding that 25 000 which means that our balance here is going to show deposits of 16870 85 instead of a beginning balance plus the deposits right and so we could still do that and that'll be fine that'll mean that these two will be combined together but i'll do that in the last bit when we in the last part of this practice problem on the first month we'll have to adjust for this beginning balance 30 000 so right now i'm going to say okay i got this good this one is good the deposit side is good then i'm going to do all the decreases which is usually the most more difficult side if your deposits are properly being grouped together the deposits should be easy to reconcile the the outflows usually you're going to have more of them and possibly different formats of them credit cards coming through to the bank from customers versus checks coming through from customers and electronic transfers so there's a lot more variants oftentimes with the outflows you're also going to have fees from the bank you might be withdrawing money outside as well so that's usually going to have different formats that you'll have to deal with and so we'll do that and we'll tie out to this number once we get those two tied out then we'll deal with this 30 000 and the 25 000 on our side recording it as a deposit but also dealing with these outstanding items which will include these two checks that have cleared here that we discussed in the prior presentation so we're going to say so we're going to say that that this looks good for now i'm going to i'm going to expand this and we did this bit of it next time we're going to move to the payment side of things if we look at all the transactions this is what we have thus far notice that QuickBooks is great because you can also just say i'm going to save it for later and so we'll say save for later and we'll continue we haven't done anything to the the balance sheet or the income statement we haven't recorded any new transactions yet sometimes in the bank reconciliation process you will have to if there's something on the bank side that isn't on your side for the deposits that might be something like interest for example they might have interest that you haven't recorded although you might if you have bank feeds on you probably pick that one up too because the bank feeds will help you to to pick up those those items that you're not normally picking up in your accounting system such as interest but we didn't have to do that this time next time we will have that on the on the outflows we'll have a couple of these items and these two and these two will not show up on our side even though they're on the bank statement and we'll have to deal with that problem possibly making adjusting entries for them