 In this presentation, we will continue on with our bank reconciliation for the first month of operations. The last time we had focused in on the beginning balance and the deposits, this time we're going to be focusing in on the checks and the money going out of the bank account. Time to get started with Sage 50, Cloud Accounting. Here we are in our Get Great Guitars file. We're going to start off by opening up our report, that being the balance sheet report. Going to the reports dropdown, we're going to go on down to the financial statements to do so. We want to open up that balance sheet, that first report. We're going to bring this on back to the first month, that being the month of January, January 2020. That's going to be our first period here. We're going to say OK, and there is our information. We're focusing in on the checking account that's currently at the 95381 for the month of January or as of January 31. When looking at the bank statement, we have as of January 31, 109, 917. Problem, those two numbers are different. Therefore, solution reconciliation process. We had started that with the debits or the deposits, not the deposits over here. Now we're going to go to the cash outflows. So we last time focused in on the beginning balance and the deposits. We're going to do a similar process for the checks now and the other outflows. So to do that, we're going to go back on over to our bank reconciliation, which of course is in the banking tab. We are reconciling. This is where we left off last time. So last time we had our deposits checked off. We had the drop down up top just looking at the deposit side of things. Now we're going to go back to the checks and other other debits checks and other debits. So and just note that when you look at this debits and credit things on the bank statement can really mess you up because when you think of debits and credits on your books, it's different than on the bank's books because obviously everything on the bank is reversed in terms of debits and credits because that's their books. So when they say they're debiting your account over here on the bookkeeping side of things, just realize on our side of things, it's going to be something that we own, the cash, and therefore it's going to be a debit increase in the asset account. When the bank debits your account to them or when the bank credits your account, that's to them a liability. So when it goes into your account, it's basically a credit. So when the bank says they're crediting your account, that's because it's a liability than they owe you money. So just realize that the whole debit and credit thing when you're talking about the bank statement could be a bit confusing, a bit reversed because you have to look at it from the standpoint of the bank. So in any case, now we're going to be here. We're going to say the cash and bank debits. So we're going to say then that and notice that difference in terminology to it's a bank debit. So you want to think of, okay, a bank debit apparently is different than my bookkeeping debit on my side. Okay, in any case, now we're going to take a look at the bank statement over here. So if we look at the bank statement, we're looking at the money going out. Now when you consider the money going out, once again, we're going to tie out mainly by the amount here and the approximate date. Now, and then if we had something like a check number, we can use the check number to tie out. Now notice the checks are some of the things are going to have the longest lag of the date. In other words, if I wrote a check, then it could take a long time for someone to actually clear it. Therefore, the amount or the date on my book could be way before the date that clears the bank. They're most likely to be outstanding items are going to be the written checks. Now, so just be aware, but we have the check number for double verification. So for that we have the amount and the check number could help us to verify the dates not going to be as helpful. If we're talking about an electronic transfer, then the date is going to be more close. It should be within like three days. So for that case, we don't have the check number, but we have the date and we have the dates pretty close and we have the amount that should tie out. Also, if it's an electronic transfer, we may have something such as the name or the vendor or more kind of information that would flow through for the electronic transfer if it was something like a bank fee type of transaction. So that might help us to tie things out. So be aware of that, the kind of difference in the different type of transactions. If you have a check, it's great because you have that check number to help you to tie out. However, the date is going to be lagging. It's probably the most likely to be outstanding electronic transfers. Then the date should be closer and the amount should be on. And so there's the pros and cons there. Same process. We're going to be tying out from the bank statements to our books. If it's on the bank statement, it should be on our books unless the bank made an error, which is unlikely. Therefore, if it's not, if it's on the bank statement and not in our books, we're probably going to have to add it. And then if it's on our books and it's not on the bank statement, then that might just be an outstanding item. And that's what we're looking for, those outstanding items. So we're always going from the bank statement to the book. So I'm looking for that 12,000 here. It's on the bank statement. Let's see if we could find it on our books. Now note that, try to get the dates to line up here, but this is a practice problem. So if the dates are funny, I apologize for that. But in any case, we're going from the 12,000. So 12,000, let's go on over to the books then. And we're looking for that 12,000. There it is. Now note also that when you do check these off, dates being messed up or not, it's going to be difficult all the time. It's not going to be in the same order over here. Because again, especially with the checks, the date, if you sort it by date, then the deposit could have cleared the bank and it's completely wacky dates that don't line up at all as to how you wrote them, especially again, if you have checks involved. You can also line them up by reference number, which would include check number. So you may have a strategy to go in and say, hey, why don't I check off all the checks first? That might be something you do if you have a lot of transactions. Because the checks you can find by check number and then sort it by date. And then you can sort it by date and you can find all the electronic transfers which should be in approximate order according to date. So just some strategies you can take a look at. In any case, we're going to go back over here. We're going to say that this has been found. That's good. So I'm going to check it off because it's been found. That's going to make it green. When I find stuff, I make it green because green is good. And then 16,000. So I'm going to say there's the 16,000. Found it. Found it. Done. That makes this feel good. So we're going to go back over here and check that one off. And then we're looking for the 7,000. 7,000. And we can find, is there a 7? There it is. Check that off. All right. This is easy. This is easy. I'm going to find all of these. No problem. Next one is going to be the 400. So 400. And so we're going to go back on over here and look for that 400. Because that's the one we need to find. And there it is. So there's the 400. Checking it off. Back on over. Now we're looking for the 5,9,8. The 5,9,8. I could probably do two of these at a time if I really wanted to. Maybe I'll do that next time. The 5,9,8. There's that one. So notice it's not in the same order. But I'm able to kind of find these ones. Even if there was a whole lot of transactions, it wouldn't be too bad. I'm going to do these two at the same time. So the 6,20 and the 15. The 6,20 and the 15,000. 6,20 and the 15,000. There's the 15. And the 6,20 is down here. So done. All right. And then so we have those items. Found those two, which is nice. Got that going for us. And then down here, the 80 and the 15. I'm not going to see those over here. So over here, I don't see the 80 and the 15. And that's going to be typical for something like a bank charges. So unless I'm using bank feeds, I'm not going to know about the bank charges until I get the bank statement. This I'm going to say is a withholding. We took some money was taken out of the cash account. So it's on the bank statement and it's not on our books. That means we're going to have to add it to our books. So our question is, will the bank wrong? No, the bank's probably right. Okay. Well, then we're going to have to add it to our books, right? So then we're going to go, okay. So we're going to add it to our books over here. So let's go back on over. And see what we can do with that. And so I'm going to go, let's go here, go back to our data input. And let's go to the banking information. Let's just simply open the register. So I'm going to go to the banking and I want to take a look at the register, which is up top account register. And I'm going to open this up and make sure that I'm in the checking account. So the checking account. I'm going to make this as of the end of January 01, 31, 2, 0. So here we go. So it's going to be a payment. We're going to make a payment and I'm going to say that this one, now this first one was a withdrawal. So the question is, was the withdrawal something that went to the owners or was it used for something like business? For the first time, we're going to assume it's a business use. Now just note that, of course, if money comes out and it's just cash coming out of the checking account, it's not a good thing typically because it's not a good audit trail for us. And if we'd like to be able to have the audit trail, in case there's a problem such as something like an audit or something like that for tax purposes. But if cash came out and it says it's a business expense, then we got to put it to a business expense somewhere. If cash came out and it went to the owner, say it was a sole proprietorship or something like that, if it's a corporation, it would be a dividend. But in any case, then we would put it to an equity account if that was the case. All right, and we would like to see when cash comes out only for that to happen when it goes to the owner, like a draw for a sole proprietorship or partnership or for a dividend for the corporation. That way we know that every time it's cash that's leaving, it should just be for that purpose. Otherwise, you're going to use some other kind of form of payment including a check or an electronic transfer credit card, something of that sort. I'm going to put it in the reference just a draw and I'm going to say that the payee or paid is, I'm going to say, we don't really know, so I'm going to say miscellaneous because we don't have a payee. And then I'm going to say that the GL account that we're going to be affecting, again, we don't know what it is. If it was a business use, then we would have to know what, you know, they'd have to tell us what the business use is. If all they say is, hey, it was used for business or something like that, then we'd have to apply it to some general ledger account, something like a miscellaneous possibly. All right, is there a miscellaneous account here that we can apply this to? I don't see one. So I'm going to make one. I'm going to make an account for miscellaneous. I'm going to put it somewhere down here. So maybe like the 757055, let's say. So let's say I'm going to add a new account. So new account. So let's say new account. And then the account number I'm going to say 7055. So 7055. I'm going to say it's a, that pickup one that was already done here, 7055. That's already been picked up. 70, let's say 7060. 7060. How about that? And then that one's going to be, I'm just going to say miscellaneous expense. It's going to be an expense type of account. So it's going to the right category here because I picked that up a different number. But if you make sure you get the expenses type of account, and then I'm going to go ahead and save that. So we'll save that and then close this back out. And then this is going to go to that 7060, which is that miscellaneous expense account we just set up. And there is that the memo draw. The payment amount is going to be 80. And then we're going to say that it was a payment of 80. And that looks good. Let's go ahead and save that. So we'll save that. You're about to save a transaction that is not in the current period. I'm going to say yes. Now we're going to do this one more time for the bank charges. So I'm going to have to enter the bank charges into our books. I'm going to put it in there as of the 31st again. So it's going to be a payment. We're going to say that the reference is bank charge. And the payee is the bank, which I guess we're saying is Chase. So we'll go with Chase. And this is going to be a bank service charge. So I'm going to select the dropdown and see if we have an expense account related to a bank service charge. So what do we have here? Office bank service charge. I don't see one. That's unusual. Oh, here it is service charge expense. Let's go with that one. Six eight five zero six eight five zero service charge expense. And then we're going to say memo bank charge. I'm just going to say, and this is going to be 15. I believe it was 15. Is that what it was? Yes. All right. So we're going to have that. And then I'm going to say save. And then yes. All right. Now let's go back on over to our bank state. So I'm going to close this back out, go back to our bank reconciliation and see if those then populate within it. So back to the bank reconciliation. Now I'm looking for that 80. So there's the 80 and there's the 15. So if I check those two off, I find I found those here. Now I found everything. If it wasn't on the bank statement, I included it in our books. If it wasn't on the bank statement and I mean, if it was on the bank statement and not in our books, then we included it on our books so that we can check it off. So notice it has to work because if it's on the bank statement and not on our books, we're going to fix our books unless in the rare case the bank statement is wrong. And that puts us in balance down here. You can see the unreconciled difference now at zero. So the unreconciled difference at zero, that means that we have completed the bank reconciliation process. Notice again, if this is anything other than zero, then we have a problem here. It's not really done. You really want to go and say, OK, which of these is off and find what's off and fix it on our side of the books if we need to. Now you're also going to see all these items that have not cleared and you're going to say, well, that's a lot of reconciling items possibly and it may be that we have a lot of reconciling items. That's fine. Now if we're concerned with any of these, it's not that we're concerned at this point in time that they didn't clear because we can always check that. I can check and see, look in February in this case and say, did they clear? If they cleared, then that's fine. Then those individual items are fine. What we're looking for here is to tie out all items, not just these individual items. We're not just checking these individual items. We're checking the bank balance as a whole and these are going to be the reconciling items that will allow us to do a bank reconciliation report. The bank reconciliation report, in other words, will be generated from these reconciling items. So let's go ahead and finalize this and we'll see if we can take a look at that bank reconciliation report next time. So I'm going to go back up top and I'm going to say okay. So we're going to say okay. You're about to modify a transaction. There's not the currency you want to continue. I'm going to say yes. So there we have that item. And that's going to be it for now. Let's get out of here.