 Hello in this presentation we will enter a bank reconciliation into our bookkeeping problem in Excel. Keep in mind how that same information could be input into accounting software such as QuickBooks. We will first take a quick look at QuickBooks and then jump back over to Excel and enter the data there. When considering QuickBooks we have a feature to allow us to conduct the bank reconciliation that starts with choosing the account we are going to choose the checking account and then we are going to put in the date. We are first going to reconcile the first month. So remember we have two months worth of data now. We are going to go back and reconcile the first month and take a look at some of the problems that can happen in making adjustments in that case if there is a problem and we need to make some adjustments for the prior month. And then we are going to have the beginning balance and the ending balance and enter that information. Once we do that we could say continue within the QuickBooks software and it really just gives us a detail of our bank banking information which of course is similar to our general ledger listing out the date of the transaction, the checks for the transaction and the amounts. We can then compare those to our actual bank statement and all we are going to do is just check off these information. We are going to check off everything that is on the bank statement to what is on the books here and everything that is similar. We are going to say has cleared by checking that information off. Everything that has not cleared then will be unchecked and that is how QuickBooks will generate the bank reconciliation. So we will talk more about what that is when we put this into Excel. But just note that we will do the same for the deposit side. We are just going to say here is the QuickBooks data and we are just checking everything off and we are going to match that over here. This is going to be our bank statement and we will just tick and tie this out. This will make more sense as we do this in Excel. This is just a quick example of what the QuickBooks looks like as you are doing this bank reconciliation. And once you have done that we are going to identify anything that is going to be on the bank statement that is not on the books. In this case we have these two items that were on the bank statement not on the books. When working with QuickBooks then we would just make the adjustment meaning we would go into the account and actually in the check register make an adjustment enter the data for anything that is on the bank statement that is not on our books. And we would enter that data and then go in and check that item off. We will do the same for any other item the bank service charges will actually go to the check register and enter that data and then go in and check that off. This will again make more sense as we work this in Excel. And then once we are done it will indicate that we have been reconciled in that we will have a zero in the differences column down here in the bottom. And in essence we will just generate it will generate a bank reconciliation based on that information. So in order to get a better understanding of what is actually happening and what is a bank reconciliation and how did that generate a bank reconciliation and why do we need to do that we will put this information into Excel. Here we are back in Excel. We are going to do the bank reconciliation for January. So remember we are at the end of February and we didn't reconcile the bank account as of the end of January and now we are going to do the two bank reconciliation back to back in February and talk about the pros and cons of doing something like that. What we are doing is we are going to be reconciling the bank account and that means we are looking at the bank statement and just tying out what the bank statement has to what we have. And if you would think that if we were going to look at the same date as of in this case the end of January you would think that they balance at the end of January would match on the bank statement as to our books if everything was done correctly but that's not going to be the case because of timing differences meaning checks that we wrote that haven't cleared the bank and also deposits that haven't cleared the bank. Therefore we want to reconcile those items and we want to do that for a big reason one to check our cash account obviously because the cash account is very important but also by checking the cash account because the cash account is involved in the accounts receivable cycle within the payable cycle within just about every cycle in the accounting process we're really given a good check about on every cycle within the process so and the fact that it's being checked against a bank which has very good bookkeeping services and is often very accurate means that it gives us a lot more verification to all accounts so it's really our second best line of defense in terms of catching any errors within the double entry accounting system other than simply the debits and credits the double entry accounting the balancing system itself so we're going to go ahead and match this what we're going to do this now we're going to go to the bank reconciliation is going to be all the way to the right we'll see a bank reconciliation so we'll take a scroll all the way to the right looking for the bank reconciliation area and we will see a bank statement that we're going to then compare to our books so it's all the way over here in the columns dw through ek so dw through ek that's what we will be working with here and what we have is a bank statement on this side and then we're going to have this is the gl account so first bank statement what is it we've all probably seen a bank statement we're going to get it at the end of the month it's going to come directly from the bank this isn't something that is from our books it's from the bank so this is what the bank says that we have and it will generally have a beginning balance it's going to have the additions in summary and then any subtractions in summary and then the ending balance this for the month of January the first month of operations and then it usually gives the detail meaning we've got deposits by date here's the date of the deposits and then we have the checks here by date and we also typically have check number and then the amounts there as well any other withdrawals or any other activity in this case we have withdrawals and bank service charges to get to our total in terms of the deductions and our total additions which are these items here so what we want to do is look at all this information and be able to tie it out to what we have if we can double check everything if we know that all these items for example are on our books then we can be pretty confident that those are correct because they're also on the bank and that gives us assurance that they are okay in order to do that we're going to take a look at the general ledger the activity for the banking for January so note that we are looking for the month of January rather than we are in currently now the month of February and therefore where do we get this information went back to the first tab so this tab over here went all the way back to this tab the trial balance first tab and we picked up the this is the 94 437 at the end of January and we're picking up the GL all this activity the GL that made up that 94 amount right there so that 94 is being generated from here and all the detail is this so this is the activity we have going back to our trial balance for for February here we have that so all we did was copy and paste this over here and we're just looking at the detail now and so all we need to do then is check off everything that happened here to here and see if it all ties out how do we want to do that it's makes a big deal that we want it's important to know whether we're going from the bank statement to the books or the books to the bank statement i would start off going from the bank statement to the books and then go the other way because when thinking about this if it's on the bank statement and it's not on our books it's most likely that there's an error in our books and we're going to have to fix whatever the problem is if on the other hand it's on