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How to Reconcile Bank AccountThe job of reconcile bank account usually comes up once a month when the bank statement comes in.
I use either QuickBooks or Excel for this. Here is a breakdown of the process. Opening Balance The first thing you will do is make sure your opening balance and the opening balance on your bank statement matches. In QuickBooks, the ending balance from the previous month is automatically carried over as your opening balance. You can program it in Excel the same way. As long as you are careful not to make changes in transactions that have already been reconciled, this amount should be accurate. What do to do if your opening balances don't match? If your opening balances don't match, here are some simple solutions? First off, does anyone have access to your bookkeeping program? Not that it will help now, but this is a reason to put passwords on the program so others can't make changes. If your client has access to the program, set up a password so they can only review information but not make changes. If you're the only one that has access to the program, hopefully it should be easy to think back to any changes you have made in the past month since your last reconcile bank account activity. If you can't find the problem easily, you will have to make a decision as to whether the difference is big enough to fix, or whether you can just right the amount off. If it's just a couple dollars or cents, you can create an expense account called cash over / cash short, as long as you don't make a habit of this. For a large account, I might put a maximum of twenty dollars per year in this account. Deposits and other Credits I usually start by matching all my deposits and other credits with those on my bank statement since this side usually has less transactions. Put a check mark next to each transaction that you match, both in your bookkeeping program and on your bank statement.
Interest Are you reconciling an interest bearing account? If so, you will need to enter the interest amount for the month. Checks and other Payments Now do the same thing for your checks and payments as you did for your deposits and other credits. Bank Charges Don't forget to enter any bank charges or credit card processing fees. This is usually the first amount to look for if your balances are off by a small amount, since you probably don't have enough information to enter these until your bank statement comes in. Ending Balance If you take your opening balance, add your deposits and other credits, subtract your checks and other payments, you should come up with an ending balance that matches the same of that on your bank statement. If the Balances Don't Match Reconciling bank account is one of my favorite and most stress-free bookkeeping jobs until I can't get the balances to match up. Then it can get very frustrating. But no need for worry, just treat it like a puzzle. The missing piece is somewhere in front of you. First check to see if it is a debit or credit that is off. Does your total credits match with the total deposits and credits on your bank statement? If yes, you know it's a problem on the check / payment side. If no, then look to see if there's a deposit you missed or that the amount is off. Now, how much are you off by? Glance through the bank statement and see if there's a transaction you missed for this amount. If that doesn't work, the next thing I do is recheck each item on the bank statement to see if I missed a transaction or if an amount was off that I didn't notice. If you're still off, this is the point where you might get frustrated. I recommend putting up your hands slowly, stepping away from the reconciliation process, taking a break and doing something else. Then come back later with a fresh mind and start over. 9 out of 10 times it will turn out right the second time around. Helpful Topics Related to Reconcile Bank Account Reconcile Credit Card Statement Reconcile Accounts How to Reconcile an Invoice How to Reconcile Accounts Payable
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