 decreased net income now we will record the other side we're going to the other side that's going to be miscellaneous that's going to be the checking account that's our first account on the trial balance of course scrolling down to the checking account the next area in the checking account is in an 26 so we are in an 26 and 26 and we're going to select equals scroll up just a bit and point to that 80 and enter and that brings the balance down in the checking account 94 357 if we scroll back up here's the 94 357 there we're going to do the same for the next item so I'm going to go back to the third tab to find this we're going to the third tab and the next item we need to record is the bank service charge so once again it's going to decrease the checking account we know that because we need to adjust the checking account and the other side will go to some expense called bank service charges so let's do that I'm going to go back to the first tab back to the first tab we're going to record this again as of 131 because it was for the first bank reconciliation and then we're going to say that checking account is going down here's the checking account has a debit balance we're going to make it go down doing the opposite thing to it which is a credit so copying the checking putting that on the bottom of the date in v12 right click and paste 123 we're going to indent that going to the home tab going to the alignment group and increase the indentation we're then in cell x12 I'm going to make the credits of 15 we'll debit something then for 15 and it's going to be an expense and it's going to be bank service charges now note that some companies might not have an expense called bank service charge because it's too small and they might just put it into miscellaneous expense or something like that I like to put it into a bank service charge and know what exactly those charges are to the bank so here's the expense account it has a debit balance it goes up in the debit direction as all expenses do so we will do the same thing to it and debit it copying the bank service charges scrolling back up and putting that in v11 right click and paste 123 there's our journal entry I'm going to make it uh yellow again highlighting the fact that this is something that was entered after the closing process which could cause us problems we then have the bank balance or the bank service charges uh we're going to post that to the general ledger here's the account on the trial balance it's going to be in the same order on the general ledger let's find the bank service charges we have the assets we have the liabilities and then we have the equity we're looking for bank service charge so let's scroll up just a bit don't see it's there here it is it's in bk 39 so we are in bk 39 we will select equals we're going to scroll up just a bit and point to that 15 let's do that now scrolling back down we are in bk 39 we're selecting equals scrolling up just a bit and pointing to that 15 and enter so there's the bank service charge we should find that on the trial balance as well scrolling back to the trial balance all the way back to the trial balance and scrolling back up we see that the 15 is here bringing net income down and we're out of balance by 15 now we're going to record the checking account here's the checking account here's the checking account on the trial balance we will be in the next open area that's going to be right here in a in 27 we will select equals scroll up just a bit and point to that 15 so in a in 27 equals we're scrolling up just a bit and pointing to that 15 and enter now we're going to see what the effect is on the financial statements so in order to do that we see that we adjusted the checking account here so i'm going to go ahead and point to that on the financial statements and we see that we also made an adjustment to two expenses one to the bank service charges i'll point that to the financials and we made an adjustment as well to miscellaneous so we'll point that to the financials i'm then going to unfreeze the pain so we'll scroll up to the top and we'll go to the view tab and the windows group and the pains freeze unfreeze the pains then we'll take a scroll to the right we're going to look at what happened to the financial statements scrolling all the way to the right taking a scroll to the right we see the financial statements on columns bw through cc and we see that cash has changed and note that we also see that the equity has changed so equity is something that has been updated now and that's really what the problem is because really we have already closed out this financial statement if we had already closed this out if we had already generated the report and given it to somebody then this uh ending balance here in the equity the equity as of the point in time of january 31st should be the beginning balance for february and what we have done now is adjust this ending balance after it has been closed which will give us a problem in terms of our beginning balance for the next month so that's really why uh we need to really be careful when we make these adjustments to quickbooks or some accounting software for a prior time software like quickbooks really allows us to do that uh however it causes those problems if we had printed the report and we're going back to the reports and trying to say hmm our our retained earnings doesn't tie out uh how does that happen in detail well we see that we made adjustments to 15 to the to the expenses and 80 to the expenses and we see that that is part of net income net income is revenue minus expenses and remember this is for the month of january and therefore that net income is going to be part of the statement of owner's equity calculation here's our beginning balance here's the investments this number then is now different than it was when we had already closed out the books when we already issued the financial statements at the end of january and therefore this change is going to change that beginning balance and that then changes the ending balance that's why our ending balance now for equity is now different to see this problem more clearly let's take a look at the closing worksheet this is our closing process worksheet we're going to go to this next worksheet and remember the closing process what we did is we said we're going to close out all of the income statement accounts to equity and in so doing we will then