In this module we will learn about how we can balance a bank account in QB accounting software.
Balancing a bank account is extremely easy in QuickBooks. In fact, if you come across with any problems, they are speedy to resolve it well, sloppy record-keeping that preceded your use of QuickBooks.
How to Give QuickBooks information from the Bank Statement?
During the balancing of the account, as we are already aware, we made a comparison between the records of a bank account and the bank’s records of the same account. Once the reconciliation is done we should be able to explain any difference between the two accounts – usually by pointing to checks you wrote which haven’t yet cleared.
In the initial step, you are required to supply QuickBooks the bank’s account information. You can acquire all this information from your monthly statement. You need to furnish all the information to QuickBooks accounting software according the requirement. As showing in the below screenshot:
Step 1: In the initial step we need to select Banking → Reconcile or click the Reconcile icon on the Home screen.
A new dialogue box will appear which is known as begin Reconciliation as showing below:
You are required to make a selection between the accounts you want to reconcile in case of multiple accounts.
Step 2: If the account showing is the different one from the one you are required to reconcile then you need to open the account list and select the correct account.
Step 3: Enter the bank statement date into the Statement Date text box.
You can adjust a date one day at a time by using the plus (+) and minus (–) keys. Also, you can click the Calendar button in the right- hand side of the Statement Date text box to select a required date from the date menu/calendar.
Step 4: Verify the bank statement opening balance.
QuickBooks shows an amount in the starting balance text box.
Step 5: Enter the ending balance from your bank statement into the Ending Balance text box.
Step 6: Enter the bank’s service charge.
In case you have not entered the service charge which is showing in the bank statement, you are required to motion the cursor to the Service Charge text box & type the amount.
Step 7: In this step, for the service charge transaction we need to put the transaction date.
QuickBooks automatically make an addition of one month to the service charge date from the last time reconciliation happened. If there is any discrepancy in the date selected by QB we can make the correction and type the correct date.
Step 8: Assign the bank’s service charge to an account.
In the first accounting text box you are required to enter the expense account to which you assign bank service charges. The one next to the Date text box. We are required to activate the drop-down list by selecting the down arrow option, after that just highlight the category by using the arrow keys, and then press Enter.
Step 9: Enter the account’s interest income.
If there is any interest you have earned to the particular month and didn’t make the entry for the transaction, then you are required to make the entry for this, type an amount in the Interest Earned text box to complete this step.
Step 10: For the interest income transaction you are required to enter a transaction date.
Step 11: Assign the interest to an account.
In the next Account text box, you are required to enter the account to which this accounting interest needs to be allocated.
Step 12: Click the Continue button.
QuickBooks displays the Reconcile window.
How to Mark the Cleared Checks and Deposits?
Now, let’s learn how to mark the cleared checks and deposits: You are required to tell the QuickBooks which checks and deposits have evacuated from the reconcile window. To complete this task, below-mentioned steps are required to follow:
Step 1: In the initial step, we are required to identify the first deposit that has cleared.
Step 2: Later in the second step, we need to mark the first cleared deposit as cleared. You need to review the entries mentioned in the deposits & other credits part of the Reconcile window, you need to find the deposit, & then click it. We can also highlight the deposit by using the arrow key or the Tab function and then pressing the space key. QuickBooks creates a check mark sign in front of the deposit to mark it as cleared & updates the cleared statement balance.
Step 3: After that we are required to record any cleared but missing deposits in third step.
If you cannot get the deposit option in the Reconcile window, you have not entered it into the register yet. Shut or deactivate the Reconcile window by clicking the Leave option & later, you are required to enter the deposit in the register in the regular way.
To return to the Reconcile window, either reopen it or reactivate it Or else you can just select Banking → Make Deposits & open the deposit screen right on top of the Reconcile window, if you like. Once, the deposit is recorded you are required to click the Save & Close button. Whenever you open the Reconcile window once again, the deposit shows in the Deposits & Other Credits area.
Step 4: We are required to repeat Steps 1–3 for all the listed deposits in the bank statement.
You must ensure that the amount of deposits is correct and dates are also matched. If the dates and amount are mismatch or not correct you are required to go back to the transactions and correct it. Once the above steps are done and you need to extract the transaction, you need to click the Go-To button after that the window where entries were made originally. Make the rectification Save it.
Step 5: Identify the first check that has cleared. You are required to find the withdrawal or first check registered on the bank statement.
QuickBooks provides the facility for us that we can sort the transactions listed on the Reconcile window by clicking the column headings under the Checks and Payments parts & in the Deposits & Other Credits section.
Step 6: We are required to mark the first cleared check as cleared.
Twirl through the transactions listed under the Checks and Payments head of the Reconcile window, you are required to discover the first check; & then click it. There is an option which will help you to highlight the entry by pressing tab & arrow key. Then click on the space key. QuickBooks place a check mark to tag this transaction as cleared & also updates the cleared statement balance.
Step 7: Record any missing but cleared checks.
What happens if we cannot find a withdrawal or check in QuickBooks? If one has not entered the transactions in the register. Make disable the Reconcile window by clicking its Leave button or by choosing the activation of another window. You are required to show register & enter the withdrawal or check.
And lastly in step 8, just repeat the Steps 5–7 for all withdrawals listed on the bank statement.