 Zero Accounting Software 2023. Bank Reconciliation Month Number 2. Checks and Account Decreases. Get ready to become an Accounting Hero with Zero 2023. Here we are in our first award from our sponsor. Well, actually, these are just items that we picked from the YouTube Shopping Affiliate Program, but that's actually good for you because these aren't things that were just given to us from some large corporation which we don't even use in exchange for us selling them to you. These are things that we actually researched, purchased, and used ourselves. Here we have a Western Digital WD Elements 20TB USB 3.0 Desktop External Hard Drive. We use as part of our backup system, noting that if you lower the number of terabytes of storage, the price will lower dramatically as well. When you're thinking about a backup system, you're usually thinking about an online system or an external hard drive system like this or ideally some combination between the two, giving you some redundancy. 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We're going to go to the Accounting dropdown, open up a balance sheet type report, tab into the right, Accounting dropdown income statement. I'm doing a comparative income statement here, but you can open whichever income statement you have. Tab into the right. We're now going to go to the Accounting dropdown. Look at our reports. I would like to open a bank reconciliation. So we're going to say bank rec. And there we have that. I'm going to tab to the right and do that one more time with another bank reconciliation. Accounting dropdown reports. And once again, typing in bank rec. Bank rec. There we have it. All right. So then we've got the bank rec. We're wrecking the bank because Little Hand says it's time to rock and roll. All right. Let's do the range up top. We're going to say the bank rec range. Dropping it down and bringing it down to, let's say, custom range here. I'll just make this one for February 1 to February 28. And then this is going to be the checking account, the ending balance. We're picking up from our bank statement at 101.590.05. 101.590.05. And update it. Tab into the left. I'm going to do another bank rec for January. The first one we did so we can compare and contrast the two as we do our data input. Let's make this from Jan to Feb. Jan to Jan 31. Jan beginning to Jan end. This will also be the checking account. And our ending balance for Jan was 6124185. So, 6-1. I think I just lexified it. No, that's right. 6124185. Have confidence in 6124185. I know what I'm doing. I got the number right. All right, let's go to the tab to the left. And income statement looks good. Tab into the left. Let's make a comparative balance sheet to do that. I'm going to hit the drop down, customize the date. I'm going to start in Jan. Jan 1. Let's go to Jan, hold on a second. Jan 31. And then update it. And then I'm going to edit the layout. And add a column up top, date column, the date of Feb. All right, you might want to save this report so you don't have to do that every time. But we might do it a few times because it's fun to do. So there we have it. And we can see that the ending balance for Feb is 9,577906, showing on our bank reconciliation 9,577906. But that's different than our bank statement, which we could see there and we could see over here. We last time entered the reconciliations for the deposits. Now we're moving on to the decreases, the checks and other decreases. All right, let's go back to the first tab. Accounting drop down. We're going to go into our bank account information and into the reconciliation section. Drop down here. And where's that? It's not doing it. It's not doing it. There we go. All right, so we have our three tabs. So the tab to the right is the account transactions, middle tab, bank statement transactions, and the tab to the left is the reconciliation. So now we're just going to match these two out as we go. I'm going to look at the bank statement as we do it so we can kind of tie out to the bank statement as we go. Remember, every time you do this, if you're checking it off from the bank statement, you want to go from the bank statement to the books because if it's on the bank statement, it needs to be on the books unless the bank is wrong, which isn't normally the case. But if it's on the books and not on the bank statement, then it might not be wrong. It might just be an outstanding item, something that we wrote we knew about, but the bank doesn't because it has not yet cleared. That's why we go from the bank to the books. So we've got the 3-5-7-2-70. Let's go and say, all right, 3-5-7-2-70. There it is. Notice I'm missing the check number, so notice the things that can tie out and help us out are going to be the dollar amount, the date which will become more relevant if the date is electronic transfers are used and less relevant if they're physical checks, but then you have the check number if there's a physical check. Now, also note that this one here was written in January, even though it cleared in February. So what does that mean? When I add this, it's not going to change the January bank rec. So if I go to my January bank rec, I have these outstanding items, and so here's our outstanding items down below. I think this is the one we were looking at, is it? Yeah, this one right here. That's not going to go away, but it will go away on the bank rec for February where we have these outstanding items, outstanding items here, and these are payments. The 3-5, I think that's the one, is it? Yeah, the one we wrote in January. It will go away here. It will have cleared here, but it won't be a reconciling, so you see what I'm saying. All right, so let's go ahead and add it and just check that out. So if I go back on over here, update, it didn't change the January bank rec. The January bank rec still has it outstanding, but the Fed bank rec, if I update it, has changed. It should no longer be down here as an outstanding payment for the Fed bank rec. So this is one that was written in February. I think it's the same dollar amount, but it was written in February. So that's not the same one. All right, let's go back on over. Same thing here. Let's greenify this. If I may, greenify. We're on the 410 next time. 410, boom. This one also written in January, but cleared in February, same situation, just like you would expect if we wrote it in January. It didn't clear in January. You'd think it would clear in Feb as it dead. Okay, so we're going to say that one is good. And then the 185640. So 185640 also written in Jan clearing in Feb. Cool. No problem. And then we've got the 200 and the 130. Let's see if we can do two at the same time. The 200 and the 130. I'm checking them both off without even looking in between my memory. It's like a trap of steel that nothing gets out of because steel's really strong material. 135873. 135873. Looks good. Moe B to the end. Let's do two at a time again. 18046877, which had pennies in it. And I even remembered the pennies, even though it wasn't around number 180468. It was out for my memory extends, which is pretty much super human right there. 185640. 185640. That was a long number. I didn't want to try two at a time right there because I had like more digits than the other one. I don't want to look stupid. 10880. All right, there's that one. Okay. And then we have these two down here, which once again are not on our system. So we don't have those two here. I don't think right 500. So here's the 500. And notice it's matching out to the wrong one over here. It's matching out to staples. That can happen sometimes if we don't have as much detail as we would need to match these two things out because this one shouldn't be matching to staples. And the check number often helps out in correcting any kind of problems like that. So if you don't have as much detail to match these out, it just shows that you do have to still kind of be careful to make sure that you're tying these out because the system is trying to match it out on limited information, right? It's trying to match it out on just the amount and the date and possibly like a check number if it has a check number to go with and then possibly vendor data, which would be the memo detail if it has it, which would have more of that detail if you were using electronic transfers in the memo section. So this one isn't actually right. I need to create something to match out to that 500. And this 20, I also need to create something. I'm going to add it to the side because these are on the bank side, but they're not on the book side. And that means that either the bank is wrong, which it usually isn't, or I didn't add it to the book side and therefore I'm going to add them. Notice that if you were adding all of your information from the bank feeds, you would basically be doing this the whole time, right? You would just pull your information from the bank feeds and build your books from the bank feeds. But that's not a full service accounting system as much, right? So this is a withdrawal. So we're going to say the withdrawal was taken out, money was taken out. Remember that if you're a bookkeeper and you're doing bookkeeping for other people, you would like to tell them, don't take money out directly unless it's a draw for personal use because there's no audit trail. If you took money out and you spent it for business use, we don't have an audit trail. We would like to have an audit trail if it's a legitimate business experience. So this is a withdrawal. So we're going to say, this is a withdrawal if it's a legitimate business expense, especially in the United States because if there's an audit, we want to be able to show that you paid for something legitimate and if you paid for it with cash, that becomes more difficult. You have to then add up your receipts and whatnot. So cash is what people spend on things when they don't want people to know what they're spending the money on. Usually, right? So we want to know what you're spending the money on and then on your personal stuff, so that we don't need to track whatever you're doing there. I don't want to know, whatever. But in any case, so that's what we're going to say happened this time. They took the money out and it's a draw. They took the money out as a draw. So I'm going to say, alright, that means this went to the owner. Let's just make an owner account and then let's say that this is going to be a draw. That's going to be an equity account. Now what we don't want to do is put a draw in here as an expense. Why? Because that will hit the income statement and it wasn't an expense. It was the owner taking money out of the company. If it's an expense, it would be a deduction or a write-off for taxes in the United States, which would be incorrect and you could get in trouble for if you did that, especially on purpose. But in any case, here's the owner's capital draws. They have an account for us. That's the one we want. So I'm going to hit that. I'm going to say this is a draw. And then that looks good. And I will expand it out here. And so now we've got basically the direct payment, the money out. February 28th is I'm going to put the date on it. It gave me the second line. I don't really need that. So I'm going to delete that. The 500 is good. It's going to the draw account. Which is going to decrease the checking account. And the other side is going to go to equity draws, not to the income statement. Let's save the transaction and check it out. All right. And then reconcile. I tried to check both of them off. I just want the draw, not the staples. Not the staples. Just the draw. Okay. So let's try it again. Reconcile again. And so let's see if it recorded it. Let's go back to the balance sheet. And we're going to say in Feb, we should have a decrease. I'll leave to the checking for the 500 that we recorded from the bank feeds for the draw that was taken out that the owner took and spent somewhere that we don't want to know about whatever. And so let's see. This is on 28, 500 draw. Where is it? Here it is. There's too much stuff in the 520 or 228. There's the draw. All right. Back up top. The other side did not go to the income statement, but rather we put it down into the equity section as a draw. So scrolling down equity section, we've got the owner's capital. It should be in the draw. So there's the draw right there. Now note that this is how you would like things to basically work. The company when the company starts up, you'll recall that we had to put money into the company with an investment from the owner, which isn't income, but an investment. We don't want to put it on the income statement. Otherwise, we would be recognizing income that is an income. We have to put it on the equity statement. Doesn't hit the income statement. And then hopefully over time, the company makes money as they make money. The cash accounts going to go up. Hopefully we can use that cash to then buy more equipment from the business. And or if we have a sufficient equipment and we want to give it to the owner, we want to give it to the owner then so that the owner can take it out in the form of a draw, which doesn't hit the income statement. And then the owner can spend it on personal needs and or invest it in something other than the business if the business doesn't need any more cash from there such as stocks and bonds and whatnot. Notice the income statement. Not impacted by it by the transaction. All right, let's add the other one back to the first tab. This one is a $20 fee so I can I can check this off by the way. Greenify that one. And then we have this $20 fee. That was the bank fee. So that's what we would expect to see pretty much every time. I'm just going to say this came from the bank. Hit us with a $20 fee. Can't you see this is the bank fee bank service charge is the one bank fee is the $20 fee. And then if I say let's hit the drop down and it's got it's added this other line here. I'm going to say don't do that line right there. And then here's the item. All right, so I'm going to say let's see. I'm going to save the transaction. So now we've got it checked off. One thing is checked off the bank feed. All right, so everything looks good. Let's reconcile it. All right, so now we've reconciled everything. That should have recorded a transaction once again to the balance sheet on the checking account. If we up to date if we up to date the report and then check it out. We can drill down on the checking leave because I have made a summary report and then we should see $20 $20 decrease Feb 28 once again Feb 28 everything happens on Feb 28. There it is the spend money form other side going to the bank service charge back to the balance sheet tab into the right updating over here. We then see the bank service charge we should have down here. There's the $20 on the income statement. So that has been recorded on the first tab now. Nothing is in the reconciliation because we've reconciled everything that has a bank transaction to it. That means that everything that was in the banking side of things which we pulled in which should match everything on the bank statement. This is greenified by the way. Should be done. So we've basically greenified this boom and this bam. So there's that everything over here should be reconciled. Don't mind these. I'll delete those you'll recall because that was a prior month issue because everything on the bank statement should be reconciled. Everything on the accounting side of things however isn't necessarily reconciled. What isn't reconciled if it had been written in February before the cutoff or January sometime before Feb 28 then would be our outstanding items. So these things are what are going to construct our bank reconciliation. There's kind of a lot of them for the items that have not yet cleared. Alright so that's what we expect to happen. So if I go to my bank my bank rec over here. This is the January bank rec. No change to the January bank rec. It should still be good to go still ties out. We're on the February bank rec. Let's go ahead and update the Feb rec. And you can see now that now we have the balance that ties out to the February balance sheet. Boom 9525906 the outstanding payments and the outstanding receipts. Calculating to the 101 590 05 which matches the ending balance we can see here as well as here. We'll talk about that more in a future presentation possibly. We'll dive into the statement a little bit more but you can see the outstanding payments here and then the outstanding receipts. Okay we might touch on this bank report a little bit more later. We're running short on time so let's duplicate a tab. Let's put some trial balance take a look at trial balance because we have made a couple entries. So we're going to say reports and trial balance trial balance and we will check out the trusty trial bound trial balance as of custom date. I'll just take it to the end of 2023 just to make it easy and this is what we have here. So if your numbers tie out great if not and you tied out before if you were on before you're off this time we made a change to the bank account for this $20 transaction and the draw of the $500 and the bank fees and then down here we made an adjustment to the income statement for the bank service charge and we made a change to the owner draws account. So you would think those would be the ones affected if it's a date issue try expanding the date range drill down on the numbers and to the source documents and possibly change the date if you need to.