Bank Statement Reconciliation Bank Statement Reconciliation
The accounting system provides a fully-featured bank statement reconciliation program to automate the process of balancing the company's bank or credit card accounts. This program allows the manipulation of each transaction by marking it as having cleared the bank. The system can then calculate the balance of all outstanding transactions and produce lists of outstanding, marked or cleared transactions at any time.
The instructions included in the Help Files for bank statement reconciliation should be sufficient; however, we will present an example here to help understand the process.
In our example, we have received an account statement from our bank which includes transactions which cleared the bank during the period of September 1 through September 30. The statement includes a summary page and detail of all transactions. The summary page of a sample account statement looks like this:
Refer back to this summary page during the sample reconciliation process.
Reconcile Accounts
Bank Statement Reconciliation is performed by selecting the General Ledger Account and setting a cutoff date or fiscal period. Printing outstanding transactions and printing of check registers are all added for convenience. When transactions are marked, it is only tentative until the final reconciliation analysis has been printed in balance and is accepted as correct
In the Reconciliation process there are six steps.
1. Account Selection
2. Transaction Marking
3. Bank Statement Information
4. Marked Transaction Analysis
5. Outstanding Transactions
6. Outstanding Transactions Analysis
Beginning the Reconciliation Process
Begin by selecting the Bank Statement Reconciliation menu option from the General Ledger menu.
All accounts that are able to be reconciled will be listed. Highlight the desired account then press the Reconcile Highlighted Account button. The following screen will come into view. The accounting system will prompt for the checking account number that is to be reconciled. Enter the account number and the system will display some pertinent account information at the top of the screen.
Enter a Cutoff Date
Enter the desired date, press the arrows to select the date, or press the lookup button. If the lookup button is pressed, a Calendar will come into view.
Enter a Cutoff Fiscal Period
Enter the desired fiscal period, press the arrows to select the date, or press the lookup button. If the lookup button is pressed, a Calendar will come into view.
Print a Check Register (button)
If this button is pushed, the Check Register Listing screen will come into view.
Next>>
This button advances to the next screen.
<<Back
This button returns to the previous screen.
Mark Transactions Which Appear on the Bank Statement
The next task is to indicate which checking account transactions show up on the bank statement. To expedite this process, the cutoff date may be changed so the computer does not display any transactions past the end of the statement cutoff date.
From the Amount Selection screen press the Next>> button and the following screen comes into view. Use this screen to specify which transactions have cleared the bank and appear on the bank statement as being reconciled. Transactions appearing on this screen are limited to Outstanding transactions whose transaction dates fall before the Cutoff Date set in the previous screen. Check transactions are listed in check number order. Deposits and other transactions appear at the bottom of the listing. Mark any transactions which have cleared the bank. The marked transactions will have a check in the box.
There are three ways to mark or unmark a highlighted item:
1. Click on the Mark/Unmark button, Mark All button or the Unmark All button.
2. Press the space bar.
3. Double Click on the Check box at the left of the item.
Search for Check Number
When the number of the check entered into this field and the enter key is pressed, the program searches for the specified check number. If the check number is found, the check number will be highlighted and the program jumps to the place in the list where the check is.
If the check is not found, the following screen comes into view. Press the OK button.
Press this button to Jump to the First Check in the list.
Jump to First Deposit (button)
Press this button to Jump to the First Deposit in the list.
Highlight the desired transaction and press this button. It will mark or unmark the transaction depending on the original state. If it was originally marked, it will unmark it. If it was originally unmarked, it will mark it.
This button, when pressed, marks all transactions in the list.
This button, when pressed, unmarks all transactions in the list.
Marked Checks
The total amount of Cleared Checks.
Marked Deposit/Others
The total amount of Marked Deposits/Others.
A check will be placed in the left hand column and the transaction amount will be added to the Cleared Checks or Deposits/Other totals at the bottom of the screen.
If all the transactions on the statement do not appear on this screen, those transactions must be entered into the system. This is especially true of service charges, interest payments, etc.
Note: If a posted item does not show up in the transaction marking screen, change the cutoff date to a future date to see if the missing transaction has the wrong date on it. This is a common data entry error that can cause frustration during reconciliation.
Once the transactions have been marked, the totals at the bottom of the screen should correspond with the totals listed on the bank account statement. In the case of our example, the bank statement lists Interest Paid and Service Fees as separate items, whereas the transaction marking screen lumps these types together in the Deposits/Other total. A calculator may come in handy for confirming that all transactions have been marked.
Perform the Reconciliation Analysis
Now the computer figures can be reconciled with the bank statement. From the Transaction Marking screen press the Next>> button and the following screen comes into view.
On this screen, enter the figures directly from the bank statement. Once again, we added the Interest Paid amount to the Deposits & Other Credits amount from the bank statement to enter into the Total Deposits field. The two column totals on this screen must match, otherwise the bank statement is flawed.
Statement Ending Date
Enter the statement ending date. This may or may not be the same date entered as the Cutoff Date for this reconciliation process.
Beginning Balance
Enter the Beginning Balance reflected on the bank statement.
Ending Balance
Enter the Ending Balance reflected on the bank statement.
Total Checks
Enter the total amount of checks from the bank statement.
Total deposits
Enter the total amount of deposits from the bank statement.
Service Charges
Enter the amount of the Service Charges from the bank statement.
After all entries have been made to this screen, push the Next>> button. The system will calculate the difference between the beginning and ending balance and compare it with the total of the Checks/Deposits/Service Charges. If the statement figures are out of balance, the following screen will come into view.
If the statement figures are not out of balance or the Yes button is pushed, the Marked Transaction Analysis screen comes into view. If the No button is pushed, the program returns to the Bank Statement Information screen
Marked Transaction Analysis
From the Bank Statement Information screen press the Next>> button and the following screen comes into view. This screen shows the totals from both the computer and the bank statement. All figures should match. If they do not, the system will display the difference. Any needed changes should be made to the computer figures by changing the cutoff date and marking more transactions or by exiting the bank reconciliation program and adding new transactions.
Computer
The computer will calculate the Ending Balance by taking the Current Balance and subtracting all outstanding (unmarked) transactions. The beginning balance is calculated by further subtracting all marked transactions.
Statement
The statement information will be listed in this column.
Difference
This column must balance before the operator can proceed with the reconciliation process. In order for this screen to balance, the Difference column should show 0.00 in the Beginning Balance row and 0.00 in the Ending Balance row. The two remaining columns should also be 0.00; however, they may be non-zero as long as they are equal to each other.
Beginning Balance
This is the Beginning balance at the start of this statement.
Cleared Checks
This is the total amount of all cleared checks.
Cleared Deposits/ Other
This is the total amount of all Cleared Deposits/ Other.
Ending Balance
This is the Ending Balance of this statement.
Outstanding Transactions
This screen allows the operator to print a listing of all outstanding transactions. If this list is selected for printing, keep in mind that the computer will only list outstanding checking account transactions which occurred before the user-assigned cutoff date. To change the information, push the <<Back button until the desired screen comes into view.
From the Marked Transaction Analysis screen, press the Next>> button and the following screen comes into view. Press the Print Listing button and all the selected Outstanding Transactions will be printed.
Outstanding Transactions Analysis
The computer will now confirm that the balances match and will ask if this reconciliation is accepted as complete. If Finish is selected, the system will convert all Marked transactions to Cleared transactions and the reconciliation process will be finished until the next reporting period. Note: This process must be performed in the sequence described in order to work properly.
Once the outstanding transaction list has been viewed, from the Outstanding Transactions screen, press the Next>> button and the following screen comes into view.
At this point, push the Finish button and the Reconciliation will be finished. All checking account transactions that have been Marked will be change to Cleared.
Performing Bank Statement Reconciliation for the First Time
The instructions above refer to ongoing bank statement reconciliation processes performed monthly. Each time the reconciliation process is performed, the system will calculate computer beginning and ending balances that will match the statement.
However, the first time the process is performed, the system does not have any historical reference to use for calculating the beginning balance. This means that information must be supplied to "force" the reconciliation.
Follow the first step outlined above by setting a cutoff date and marking all transactions which have cleared the bank. If this is the first reconciliation, this will entail marking all transactions which have cleared on prior bank statements as well, going all the way back to the first transactions that appear in the marking screen.
A Helpful Tip
There may be thousands of old transactions which have never been marked for clearing. Every one of these transactions must be marked by pressing the space bar. A coffee cup (empty, of course) works great for this purpose! Just rig the cup so one edge rests on the space bar and go ahead and take a break. (If it's time for a coffee break, look for another cup!) When done, all the transactions will be marked. The transactions which have NOT cleared the bank must be "unmarked".
Once the transactions have been marked, continue to the second step by pressing the Next>> button. When the system asks for the bank statement figures, just press the Next>> button and the following screen will come into view.
The totals from the transaction marking will show up in the first column and look something like this:
Write down these figures or print the screen. Now press <<Back to return to the menu screen. Now select Reconciliation Analysis again and use the figures that were written down or printed to supply the Bank Statement Information. This way, the statement information matches the computer information. Continue through the rest of the process to clear the transactions. A normal reconciliation process may be performed when the next bank statement arrives.