Balancing the Checking Register

[jemichaels]

PROBLEM: Never balanced checking registry and yet entered in most every transaction from 2001

If I want to start balancing the check register from January 2004 will it work if I just enter a journal entry to create a zero balance as of December 2003 and start balancing for this year?

Any feed back would be greatly appreciated.

Elizabeth

[Russ88]

Elizabeth,

I am quite certain what you propose won't work. Your beginning balance on the reconciliation screen won't be correct. I think it might work if, rather than doing a JE write a huge check of the net amount of activity in the account (i.e. net of checks less deposits and any other credits, plus any other debits.)

Reconcile that against the bank's 2003 statement; (as I type I realize more things--make your net check not include any Dec 03 activity that is still outstanding at the bank) then you'll have a proper beginnig balance for Jan 04.

I can tell you that bank reconciliation can be a major problem, I have, on two separate client accounts, had to spend hours redoing work because once you lose the accurate beginning balance, it can be very difficult to locate. If you try my suggestion, of course back up first so if it doesn't work, you can undo it.

I honestly think the best thing to do is go through the heartbreak of reconciling the entire period.

I hope these thoughts make sense and are helpful to you.

Good luck,


Russ S

Post Script: Just had another possible idea. If you don't like the looks of this one, post back and I'll suggest it.

[sourabh]

Ok, first of all let me know what do u mean by 'balancing' here? R u reffering to reconciliation with bank statement or balancing some manually maintained register with the QB one?

let me know so that I can proceed.

thanx,
sourabh.

[jemichaels]

Thanks Russ. I would like your other idea...I am not sure I understand how to do it writing a check.

I do mean reconcile. I want to just begin reconciling from the first bank statement of this year which runs from December 11 - January 14. And then everything forward.....

Unfortunately I have spent alot of time reconciling through to March and then realized that it wasn't going to work if my beginning balance was not right (which it wasn't).

I need to know what to do now so that I can get this year reconciled in the most effecient & accurate way.

Oh I just got the check idea...did you mean see what the ending balance was on the last 03 statement and write a check for that amount? I can only see that working if I first zero out with a journal entry....hmmm

help!!

[jemichaels]

Russ, I reread your suggestion and I get it. My questions is this since I have already reconciled the first 3 months in QB is there a way I can avoid having to do these months over again?

Does QB give some kind of report showing a reconciled month? I can't find one. If it did I could print those and rereconcile pretty quickly I think but I would love to not have to do that if it is possible....

Your thoughts...Thank you!!

[suzannemead]

If you have successfully reconciled several months (and they are accurae) you don't need to do these over. Just start your next reconciliation with the ending balance from the reconciled month and proceed with the following months, assuming you have the bank statements. What version of QB do you have?

[jemichaels]

Quickbooks 2002

[Russ88]

Elizabeth,

You are finding the problem I referred to:

beginning balance per bank on your reconcile screen does not agree with the bank when you reconcile.

I use Pro 2002 and found there is no way to recreate reconciliations; I even called Quickbooks support. If you run a Custom Detail Transaction Report and set the "Clr" filter, you will get a report of the makeup of what QB puts onto the reconcile screen as the Bank Beginning Balance. Run it again without "Clr" and you can analyze your differences; then use this amount for your JE or "big check."

You should not have to redo those you've already done, but as you are finding, all those earlier uncleared items put your Bank Balance off.

Your big check or JE can bring those two balances to agree. My question is how you were able to think you had done some months if your bank balances didn't agree....


Russ

[Russ88]

Elizabeth,

Sorry, I didn't read your message carefully. You don't think you were successful because the bank balance didn't agree, correct?

That aside I think you are getting the idea of what I suggest, except that I think you want a journal entry OR a big check, not both.

I still think that will work and allow you to keep the work you've already done if you get the amount exact. I do think the reports I suggest will help you do that.

Best.


Russ

[iamlew]

Elizabeth,

If I may offer some basic advice. Ask five people this question and you will receive at least six unique answers.

Here's mine:

Don't try to cut corners on the bank recs. Start from 2001. Yes, that's a pain, but it's a one time pain. You can be assured that if this isn't done, the same pain will occur and occur and occur.

Make your decision wisely.

Iamlew

[suzannemead]

I agree with iamlew about starting at the beginning. But you did say you had reconciled several months successfully, so you should be able to start with the next month. I am curious -the months you reconciled were at the beginning of the time period-correct? If later months I don't see how you could have reconciled, and in that case I would start from the beginning & redo those months also.

[jemichaels]

Ok let me first say this is a relatively new language for me and I will explain where I am.

I started to reconcile from scratch meaning the beginning balance was 0 Zero. I started with the December 15 - January 14 statement and moved forward 2 months. I then thought if I continue to reconcile to the present August - September statement will my check registry balance just work itself out???

This baffled me...confused me and made me question the whole process of how quickbooks actually works so I put a question out to the forum.

So my basic and embarassing question is will the balance work itself out by the time I get to the present statment?

humbly elizabeth

[Joey]

No Elizabeth. If you only wanted to reconcile the current year, why did you go to all the effort to enter all the activity since 2001 in the system? If you don't reconcile those years, you are going to miss bank charges and other things that occured during those periods. You're defeating the purpose of even entering the data in the first place. If a check paid for a different amount or you missed a check, you'll never know. It will never "just work itself out" if you don't do it correctly to begin with. After all this work, it doesn't take that long to do a bank rec in QuickBooks. Why not do it correctly?

[jemichaels]

Joey,

I did not enter the entrys from 2001 but that you for your wonderful insight.

My client used the registry but never reconciled....now she knows that is not a good thing....my question is how to best serve her and fix the problem going forward for this year.

Cheers.

Elizabeth

[Joey]

When you did the bank reconcilements for the first three months, what did you do with all the outstanding checks and deposits for the earlier years?

[jemichaels]

reconciled them which ended up putting in a journal entry adjustment to get the correct starting balance

[Joey]

Is this a corporation or what?

[jemichaels]

An S-corp....a single owner who has a retail business...she buys clothing from THe corp. and then sells to her clients. So essentially she is a francise.

[Joey]

Well your beginning balances for January 1 of 2004 MUST agree with the balance sheet on page 4 of the S corportion tax return. That is the cash balance you will need to use. So, you will need to make an adjustment in the current year. The amount that the program adjusted went into the Opening Balance Equity account which should always be zero. So make a journal entry to credit your Miscellaneous Income for this year and Debit OBE to zero it out. If it goes the other way, then reverse that and go to Miscellaneous Expense instead.

[jemichaels]

Ok I will try that. Thank you. As for the 4th page of the taxes I will have to check with her accountant and let him know that I will make a journal entry to adjust the figure.

How would the accountant have gotten that number from the check registry if it had never been balanced in the past?

I am getting confused.

Can you recommend a basic book to help me learn more about this stuff? You seem to be very knowledgable!!

[Joey]

It's an accounting thing. That's what I do for a living. I'm a tax accountant. I also teach QuickBooks. You can see all about me at my web site.

[Russ88]

Elizabeth,

I always wait a while before I post a response because I firmly believe "too many cooks," etc, and lots of these people have far more experience than I. I will make this my last post and invite you to read my original response where I said I honestly think you should do the entire reconciliation from the beginning of the account.

If you absolutely do not want to, I believe what I suggested will work, with one addition, you do need to journal the cash back into your own books.

If you run the reports I suggested, you will see how QB calculates your beginning balance.

Concurring with all the others' advice, I think you should go back to the beginning of the account and reconcile from there forward. Be sure you never leave a reconciliation unless your balance and the bank are equal, i.e. on the screen "Ending Balance" = "Cleared Balance" and "Difference" = 0.00

That is truly the best thing to do. I also think you will need to "unclear" the items you cleared in the months you did in order to get an accurate beginning bank balance, (presumably zero.) In the unclearing process, you should also get rid of the adjusting entry that QB made when you attempted to reconcile and did not have the amounts equal.