 Zero Accounting Software 2023, Bank Reconciliation Month Number One, Checks and Cash Decreases. Get ready to become an Accountant Hero with Zero 2023. First, a word 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 we're just given to us and 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. Acer 27 inch monitor. I've been using an Acer monitor as my primary monitor for a few years now. This is the first Acer monitor that I have used after having used a series of different brands of monitors in the past. The Acer monitor has been performing well and I'm trusting the Acer brand more and more as I use the monitor. I have a 27 inch monitor which I think is ideal for what I do, which is of course the screen recording and the editing. 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We're going to do the comparative income statement but if you don't have that, you can do the standard income statement. I'm going to open up another tab that we can put our bank reconciliation in as well. Right-clicking, duplicating the tab again. As that's thinking, let's tab to the left and change the date on the balance sheet bringing it just for the month of January because that's what we are reconciling. Scrolling up top. We want January 31st updated. We're focused on the cash account currently at on the book side of things 88-810-25. If I go to the bank reconciliation to the right, we can do our report as we go. Let's go to the accounting drop down to open up the reports. And then bank reconciliation. Bank reconciliation. You can call it a bank wreck but don't think that that means you should wreck the bank because it's a reconciliation, not a wrecking of the bank. A bank wreck. So we're going to go down here. This is going to be a custom date range. Let's bring it from January 1st to January 31st. Not June, January. And then we're going to say that we have the checking account and I'm going to pick up the account balance from our bank statement and the statement says 6124185. So 6124185 and update it. So this is what we have thus far. This is the balance from the books that we saw in the balance sheet. These are the unclear items, the things that we haven't checked off yet. We're now going to be focusing in on the payment side of things to get to the statement balance which doesn't tie out here because this is the calculated balance, the statement balance and this balance, the bank balance. So we're reconciling those items. Alright, so let's go back to the first tab and go to our bank reconciliation accounting dropdown. We're going to go into, let's go into the banking and then we're choosing this first account where we'll hit the dropdown and we can go into the accounts here. And we can see our accounts on the right, the bank statements, amount pulled in from the bank statements and the reconciliation line items which we now have this cool zero, this pretty, I believe, like a unique zero matching system which works quite well. So now we have our information that we're matching out here and so we're continuing on. Last time we looked at our January bank statement. We have this beginning balance issue. We're going to come back to that later. We put all the increases in play. Those should be kind of in play at this point in time and be, those are in play here and we could see those if we go back on over here, we could see that in the bank statement area, these are the bank statement items, the green ones are the ones that we have marked off as having been reconciled. Okay, back to the tab to the left. We're now going to go to the decreases side of things which would include checks, other transfers that are coming out of our checking account. On the check side of things, it's a little bit different than the deposit side of things because we still have the date and the date will still be important but possibly less important than on the deposit side because if these were actual manual checks that we wrote, then we may have a big difference between the date on the bank statement which is going to show the date it cleared and the date that we actually wrote the check because of that timing difference when the check has to go through. And that's when it works quite well to have a system where you're doing the data input into your books first so you can track those outstanding checks. However, a lot of times these days payments are made electronically. Now if the payments are made electronically, then the date will be quite close when we put it in the system if we're tracking it first as we do the transaction to when it cleared the bank. It should be similar to the deposits. If we wrote an actual check, we also have the check number that can help us with our verification that we have the right numbers we're checking off. If we didn't write a check but instead do an electronic transfer, we will not have a check number. However, we're likely to have a description line item. Now the description line item usually has information which can help us to determine who we paid the vendor, the person we paid for whatever we did like the telephone company Verizon or something like that. Note that the vendor line or the description line, the bank text line is not exactly the same thing as the payee. You might have to take that information if you're constructing your books from the bank statements by taking the amount out of the memo line and adding the proper vendor in place which we'll talk more about when we get to the bank feeds area. But those are the things that we have to take in tie from. Remember that if it's on our books, I mean if it's on the bank statement here but not on our books, we'll probably have to add it to our books unless the bank is wrong which it usually is not. If it's on our books but it's not on the bank statement, then it's possible that it's just an outstanding item, a check that we wrote, for example, which has not yet cleared. Therefore, when we're checking off to the bank statements, we usually want to be going to the bank statement to the books. So I'm going to check these off. Now notice over here in zero, it's kind of got this system where you kind of feel like, well, I don't even need the bank statement. And to some degree you can kind of say, well, maybe that's kind of the case but you still need the bank statement to show you the beginning and ending balances and still kind of take and tie everything off. So keep that in mind as we go through here. So we've got, once again, we've got the 12,000. Here's the 12,000 and it's matching off from what's on the bank to what's in the statement. So that looks good. Notice we have the check number to help us double verify that this is correct. Note that the date that we wrote it, the date that we wrote it here is earlier than the date it cleared. That would typically be the case. And if it was actually a check, that could be a substantial difference, right? So I'm just going to add these as we go. As we add these, it's going to change the bank statement line item as being marked off as reconciled. So it's going to have these green reconciled items. If I go to the account transactions, these are the side that's in our books. We'll have an item that will be reconciled here as well. So it should have a green reconciled next to it. And then if I go to the tab to the right and update our bank reconciliation, what's happening is this outstanding payments are now going down because this number represents the outstanding payments here which are listed, which we're now recording as not outstanding because we're matching them to the bank account. All right, so we're going to go back on over to the left and continue this process. Let's make this one green because we found it. That one has been found. Now these two, notice, are not over here if I go to the first tab again, back to the first tab. So I see these on the bank side but they're not over here on our side. So that's a problem because they're on the bank statement but not on our books. Now note that this has to do with that beginning balance issue. So the thing is we're going to have to add those. We're going to have to deal with that problem. But you can see that that kind of matches out to the $25,000 and the $5,000 that's off in the beginning balance. So we'll talk more about that in a future presentation. So that'll be an issue but we'll deal with that later. The $16,000, we can see that here. So here's the $16,000. We can see the check number helps us out to tie it out because it's an actual check. So I'm going to add that and we'll go back on over and say this one has been found, the $7,000. If I go back on over $7,000, check $1,003, $1,003, $7,000. That looks good. So we'll say add that has been reconciled. We'll mark it off as having been found, $6,892, $6,892. That looks good. So we found it. Check $1,005. Okay. Let's add it and let's mark it off as having been found. Then we've got the $72,72. Looks good. Okay. Okay. Adding it. Boom. Mark it off. Bam. $37,080. There it is. Check number $1,004. $1,004. Alright. And let's add it. And then we've got the $12,000. Let's make this green as we go. $12,000. $12,000. $1,007. Okay. Let's add it. And let's make it green. Two more times. $6,20. $6,20. There it is. There it is. Alright. Let's say okay. $6,20 has been in play. And then the $15,000. $15,000. $15,000. Notice here that I don't have the check number. So I'm just going by the amount now. So again, the check number is a reference number, which helps you to track if you have actual check numbers. If it's an electronic transfer, you might not have that, but you'd have the added bank data and the date would be more relevant to match these out. Alright. So then notice here now. I'm going to mark this off. We have these two down below, the $150,000 and the $15,000, which are showing here, which is pretty neat because now it's showing us what's on the bank and saying, hey, I can't find anything. This I'm paraphrasing what zero is telling us. It's saying zero saying, hey, I can't find anything related to that $150,000 on your side. So that might be, well, maybe it's there and it has multiple transactions that need to be grouped together or something like that. Or possibly it's not there. In this case, it's not there. We don't have it on our side. It hasn't been recorded on our side. So what are we going to have to do to reconcile? We're going to have to record something on our side of the books in order to get this thing to reconcile. Now, if you could go to the match here, and this is another place that you can kind of locate, see if you could find the matches. If you had multiple items that basically added up to that amount, you could go into that match tab, which might help you to locate it. And so I'm going to cancel that down below because we're not going to match it. So let's go back and we're going to have to create an item if you also have the transfer and the discuss. So I'm going to go ahead and create. Now, these two, what are these for? Well, we have the 150 over here, which shows as a withdrawal. So we're imagining that the owner is the one that took money out of the business as a draw. Now, if you're a bookkeeper, what you would like to do is if you're working for somebody else, you'd like to say, hey, look, don't pull money out for just money unless it's for yourself as a business as a draw. So that when I see it, I can say, OK, well, if you pulled money out, it's not a business expense. You spent it for a personal expense and just record it as a draw. Otherwise, if you're pulling money out, just cash and then spending it on business related stuff, it becomes a problem because I don't have an audit trail in order to track the expenses. So you don't usually want to do that. You want an audit trail when you have legitimate business expenses because then in the event of an audit in the United States for an income stacks audit or something, you have a paper trail. So that's what you generally want to do. But sometimes people don't do that and they say, well, they pulled the money out and we're going to have to record it to an expense account. So this time we'll record it to an expense account and we'll just have to record it to like miscellaneous expense. And then if someone did that, you want to have the receipts, it would be nice that they would have the receipts. Otherwise, they won't have any backup or verification of what they spent the cash on. That's why you don't typically, but in any case. So we're going to this time record it to miscellaneous expense and then in month number two, we will record it to a draw to look at the difference. And this of course is a bank charge where the bank just charged us money. We didn't know about it. So we didn't record it on our side. We couldn't see it until the bank charged it and just took it out of our account, which of course, we're not going to be able to get the money back. Therefore, we'll have to record it at this time. So let's do this one. I'm just going to say who let's say this is going to say miscellaneous. I'm just going to make a miscellaneous contact because it was a draw. And I'm going to try to say it's a miscellaneous account. So we're basically recording in a quick version like a money out type of form in the bank reconciliation thing. So this will basically create like a money out type of form. We have the bank service charges. So we'll use that later. Do they have a miscellaneous? There we do. We have a miscellaneous. Let's pick that one up. That's the one we want miscellaneous. And so zero provided us with that account. And so why it's miscellaneous. We don't know miscellaneous business expense. And so I'm going to say, all right, let's do that. And let's add add. Well, if there's any tax related to it, you have the tax here. I'm going to add the details to it. So here we have it. So we've got miscellaneous date. I'm going to make it as of the end of January. So it's within our timeframe here. And then so this will, it's a direct pay. So we'll go ahead and save the transaction, save transaction. And now it's, we can reconcile it. So here it is. So now we can reconcile it now that it's been recorded. Let's reconcile. And boom, it's been reconciled. Okay. So now if I go back to my balance sheet, I've made a change here. I can update it. And I can go into my checking account. And we've actually recorded a transaction while doing the bank reconciliation, basically a money out form. And if I scroll down to the end of January, there's the 150 on the income statement. If I update the income statement, we should have a miscellaneous expense down here somewhere. There it is. Miscellaneous expense for 150. If I go into that, we can see that it is a, a spend money form that we created while doing the bank rig. So really neat. Notice that's a little bit faster. A lot of times the other salts were such as QuickBooks online because it allows you to, it allows you to kind of make the transaction side by side. It was just a little different. It's a little bit different of the look and feel, but it's pretty neat, the side by side kind of matching system. But of course you can record transactions in like a QuickBooks online from the bank feeds as well. So in any case, we've got the 15 now. So, but this is, but it's a little different from the bank feeds to the bank reconciliations, right? So you've got the bank feeds pulling in and then you've got, you know, the bank reconciliation system. So in a QuickBooks online, when you're inside the bank reconciliation, you don't usually record a transaction from within. You have to go outside of where you're reconciling typically and then do the reconciliation, although that there's a separate area for, for your bank feeds where you can add transactions. Okay. Enough comparison. Let's do this one. This one's, let's just say this is coming from the bank. Let's add a generic bank because this is, this is going to be the $15 that they charged us. So this is going to be a bank fee, a bank service charge. And so we'll just call this Y. Cause this is a bank, bank charge. Okay. And then we could have the tax and whatnot. If we add the details to it, let's take a look at it. So we basically have a money, a direct pay form, money out type of form. So this is 15. This is going to be decreasing the checking account. Other side going to the, the service charge. And it's on January, January 30th. So let's say save it. It's been recorded and now we can reconcile it. So if I go up, we can match these two out now. So I'm going to say, okay, reconcile it. Boom. So that has been done. So if I go back on over to my balance sheet and update it, we've recorded another transaction. The checking account has now changed. So if I go into the checking account, we should see another transaction for $15. There's the $15 transaction, money out form, spend money form. And then on the income statement, update in the income statement, we should see then the, the, the, what do we, what do we have a bank service charge? Bank service charge. There we have it. All right. And then if I, if I go to my, my reconciliation, notice that the bank, the bank balance has changed because that's the amount on the balance sheet. And now we've been checking these amounts off on the outstanding payments. So this is the amount that is still not checked off yet. The unreconciled and that matches down here, less outstanding payments. So these are the ones that have not yet been checked off at this point in time. Let's go back to the first tab. And so everything's been checked off over here. So I can highlight these checked off and checked off. And then here we still have the 1000 and the 400 and the 4,000. You'll recall those are these two amounts. That's that beginning balance issue that we have. And then the 30,000 had an issue because we had 25,000 as the beginning balance that we put into the system. So if we recap this, I'm, I'm, I'm going to say, okay, these two are on the bank statement, which we can see here, but they're not on our books, which means we're going to have to deal with that. We usually have to add them to our books. Those are the two checks that we wrote in the prior period that that were that we didn't enter in the system because we started entering in the current period. And then if I go to the bank statements, these represent all the items that have been reconciled, try to not be bothered by the deleted items here. And, and then we still have the ones that are unreconciled this one and this one that are unreconciled, which once again, of those two checks, if I go to the tab to the right, these are the accounting transactions. This is what we have entered into the system, which has not yet cleared the books. And if I look at this, we have the unreconciled, that's that beginning balance deposit of the 25,000, which should match out to this one. But again, it's off by these two, these two amounts as well. So there's the 25,000 and then, and then here we have the the transaction that we entered into the system that's outstanding that we saw before. And then these are all outstanding items. We wrote these checks and they're still outstanding. They're not going to clear until February, which makes sense because because we wrote them on the 26th and they're actually physical checks. So it's likely they haven't cleared the bank. Therefore, these are going to be the reconciling items that we're going to have to enter into the system. So it's, and then, and so that's what we have through January here. All of these items are going to be outstanding. And then, and then this is where we started entering stuff in February. So if I, so it's kind of cool that we can see the bank rec as we go here. So if we update the bank rec, we can see up top, here's the new balance for the bank account, $8864525, that's what's on the balance sheet, $8864525. And then we've got the outstanding payments. So the outstanding payments, if I scroll down here, are these Verizon staples. These are the ones that we have not checked off that were on our books that didn't clear the bank yet at this point in time. I'm not too worried about those because they were actual checks and they're close to the end of the year. So I could verify these by double checking the bank statement in February to see if they cleared. If they have cleared, then this is a fine outstanding balance. It's just showing us what the difference is between our balance and the book balance. As of this point in time, no one's wrong. We're not wrong. The bank's not wrong. We just have more information than the bank because we know we wrote these checks and the bank doesn't yet because they have not yet cleared. That's what the reconciliation report is basically doing. And then we have the outstanding receipts. So these are the ones we looked at last time, which includes the 3472. Same kind of thing. It's outstanding. We could see if it cleared in February. And then we have this beginning balance issue of the 25,000 we'll have to deal with because that's the beginning balance issue for the first bank reconciliation we have to deal with. All right. And then so then we've got the unreconciled statement line. This is what we have not yet reconciled on because we haven't cleared it yet. So those are on the banks, but not on our books. And so this is the statement balance. And this is the bank statement ending balance according to the bank statement. And you can see we're off by 30,000. And that 30,000 is this beginning balance kind of issue up here. So we'll continue on and deal with that beginning balance issue to kind of finish up the bank reconciliation. So we're left with this beginning balance issue of we had 25,000 on our side for the beginning balance. And it's not being reported as beginning balance. It's going to be recorded as something that's cleared. And then we have these outstanding items, which were checks written in the prior period before we started the first bank wreck. They were outstanding. And so those two things are going to have to deal with. Those are beginning balance issues. Once we deal with those for the first bank reconciliation, we won't have to deal with them again for future bank reconciliation. And the process will be very easy, hopefully going forward where we're just going to have everything pulling through. And we can just click on and tie them out to the bank as the data comes through on the bank, either with the bank feeds or as we kind of import the data.