Bank Reconciliation Tips & Tricks for Version 2002

This article addresses special issues regarding the setup and troubleshooting of the bank reconciliation feature in QuickBooks 2002. For detailed instructions on the general use of the Bank Reconciliation feature, see Introduction to QuickBooks by Douglas Sleeter.

Some Interesting Facts about Bank Reconciliations in QuickBooks 2002:

In QuickBooks 2002 the reconciliation date is stored with each transaction, allowing QuickBooks to create special reports based on that date. You can access the reports from both the reconciliation screen and the reports menu. You can create summary and detail reconciliation reports in QuickBooks 2002.

In previous versions of QuickBooks you could only create a report for the most recent bank reconciliation, but QuickBooks Premier and Premier:Accountant Edition allow you to view the details of any bank reconciliation performed during the life of the file.

When upgrading from a previous version of QuickBooks, QuickBooks 2002 creates a single bank reconciliation report that is a composite of all previously cleared transactions. QuickBooks uses the date of the most recent cleared transaction as the statement ending date.

When you manually clear a transaction in the account register, QuickBooks 2002 does not consider that transaction to be reconciled until you reconcile the account using the Bank Reconciliation feature.

QuickBooks 2002 Premier and Premier:Accountant Edition include a special ”Reconcile Discrepancy” report that shows changes to reconciled transactions. See Figure 1.

Intuit made critical changes to the Reconciliation reports in QuickBooks 2002 with Release 2. Update QuickBooks on your computer as soon as possible if you use the Bank Reconciliation feature.

Tracking Changes Made to Reconciled Transactions

After reconciling transactions in a bank account, you should not need to change those transactions, and in general you never will. However, in case someone does change a cleared transaction, QuickBooks 2002 (Premier and Premier Accountant Edition) provides the Reconcile Discrepancy Report.

Reconcile Discrepancy Report

The Reconcile Discrepancy Report is available in QuickBooks Premier and Premier:Accountant Edition only.

This report shows all transactions that were cleared on a previous bank reconciliation, but have been edited since the last reconciliation. A transaction will appear on this report if it has been modified (no matter how insignificantly) since the last reconciliation.

In the example below, a single reconciled transaction was changed. The original amount was $100. Unlike the Closing Date Exception Report this report does not show the transaction's previous amount. Therefore, to fix problems found on this report the user needs to refer to the Audit Trail, the source document, the bank statement or the file copy (printed copy) of the Bank Reconciliation Detail report.

Figure 1 Reconcile Discrepancy Report.

The Entered/Last Modified date, not the transaction date, determines whether a transaction is included in this report. A reconciled transaction will show on the Reconcile Discrepancy Report as soon as a user edits it, regardless of the transaction date or the date it was reconciled. However, changes made to reconciled transactions will not show on this report if:

1. The user deleted the cleared transaction.

Deleted transactions do not show on the Reconcile Discrepancy Report. When a user deletes a cleared transaction, the transaction changes the balance in the bank account and the amount that shows in the Beginning Balance field of the Bank Reconciliation feature. Perform the following steps to correct the problem:

Step 1.  Display a Reconciliation Detail Report in QuickBooks and compare the displayed report with the file copy of the Reconciliation Detail Report that the bookkeeper printed immediately after reconciling the account.  The deleted transaction will show on the file copy but not on the report displayed on the screen. Once you have located the changed or deleted transaction(s) proceed to Step 2.

Note
If a file copy of the report is not available, compare the displayed report with the bank statement. The Audit Trail may also help you to locate the deleted transaction.

Step 2.  Re-enter the transaction(s). Your available cash balance (book balance) will now be correct.

Step 3.  Print the Reconcile Discrepancy Report.

Step 4. Open the Bank Reconciliation screen and enter the ending balance that shows on your mostly recently reconciled bank statement. Enter the date of that statement in the Statement Date field. Then click Continue.

Step 5.  Locate the transaction you re-entered and mark it cleared. Confirm that the difference field shows “0.00” and click Reconcile Now.

Step 6. QuickBooks will display the Select Reconciliation Report screen. Click Cancel. There is no need to print a Bank Reconciliation Detail report when making this adjustment.

2. The user reconciled the account after changing a reconciled transaction.

QuickBooks clears the Reconcile Discrepancy Report after each bank reconciliation.

Perform the following steps to correct the problem:

Step 1.  Display a Reconciliation Detail Report in QuickBooks and compare the displayed report with the file copy of the Reconciliation Detail Report that the bookkeeper printed immediately after reconciling the account.  If the user modified a cleared transaction, the original amount of the cleared transaction will show on the file copy and the changed amount will show on the report displayed on the screen. If the user deleted a cleared transaction, the transaction will show on the file copy of the report, but not on the report displayed on the screen. Once you have located the changed or deleted transaction(s) proceed to Step 2.

Note
If a file copy of the report is not available, compare the displayed report with the bank statement. The Audit Trail may also help you to locate the changed or deleted transaction.

Step 2. If the user changed the amount of a cleared transaction, edit the transaction so that it agrees to the file copy of the Reconciliation Detail Report. Doing so will correct both the balance in the account and the Beginning Balance field of the Bank Reconciliation feature. If the user deleted a reconciled transaction, perform Step 2 through Step 6 in the previous section.

3. The user changed a cleared transaction using a previous version of QuickBooks and then upgraded the file to version 2002.

Changes made to transactions that were reconciled in a previous version of QuickBooks do not show on the Reconcile Discrepancy report.

Do one of the following to locate the changed transaction(s):

When you upgrade a file from a previous version to QuickBooks 2002, QuickBooks creates a Reconciliation Detail and a Reconciliation Summary report that includes all cleared transactions from the previous file. QuickBooks dates the report using the date of the mostly recently cleared transaction. Compare the transactions on this report to the file copy of the Bank Reconciliation Report the bookkeeper printed while using the previous version of QuickBooks.

If the bookkeeper did not print a Bank Reconciliation report, locate and restore the backup that QuickBooks created while upgrading the file, using a different file name. (This file is usually located in c:\program files\intuit\QuickBooks Pro.). Print the Bank Reconciliation report and compare this report to the one displayed in QuickBooks 2002.

If the backup is not available, compare the report displayed in QuickBooks 2002 with the bank statement to determine which cleared transactions where changed or deleted. The Audit trail may also help you to locate the changed or deleting transactions.

Once you have located the changed or deleted transaction(s), see Step 2 in the previous section to correct the problem.

Using the Closing Date to Track Changes to Reconciled Transactions

If possible, reset the closing date to your bank statement date immediately after reconciling all bank accounts for the period. Doing so provides two significant benefits:

Depending on your company and user setup, QuickBooks may either prohibit users from making changes to reconciled transactions or may require them to enter a special Closing Date Password.

If users make changes to transactions dated in a closed period, QuickBooks tracks the change even if the user deletes the transactions or performs another bank reconciliation after making the change.

Setting the Beginning Balance Field on a New Account

When you set up a new account in QuickBooks there are several ways to enter the opening balance. However, for your first bank reconciliation to work properly in QuickBooks you must enter the opening balance in the New Account screen. QuickBooks will then copy the opening balance to the Beginning Balance field in the bank reconciliation feature.

Note
When you set up a new bank account in QuickBooks, use the statement ending balance from your most recently reconciled bank statement as the opening balance for the account. Then, enter all outstanding checks and deposits in the account register. The ending balance in the account should then agree to your available balance in the account (i.e., book balance). For more information about entering opening balances in QuickBooks see Introduction to QuickBooks or The Consultant's Reference Guide, both available at www.sleeter.com.

If transactions are already posted to the account, you will need to enter the opening balance directly in the account register or with a General Journal Entry. When you do so, QuickBooks will not automatically copy the opening balance to the Beginning Balance field in the Bank Reconciliation feature.

For example, if the opening balance on your last bank statement for the “Savings” account was $12,000, and the bank statement date is 4/30/2002, you could make the register entry show in Figure 2 to enter the opening balance for the account. Since you did not use the Opening Balance field of the New Account screen to enter the balance, extra steps are required to reset the Beginning Balance field in the Bank Reconciliation feature so that it reflects this opening balance.

Figure 2 Enter the Opening Balance in the Savings account register.

COMPUTER PRACTICE

Step 1.  Select the Banking menu and choose Reconcile.

Step 2.  Select “Savings” from the Account field drop-down menu. Then note that the Beginning Balance field shows “0.00”.

Step 3. Enter “04/30/2002” in the Statement Date field and press TAB (see Figure 3).

Step 4. Enter “12,000.00” in the Ending Balance field and click Continue (see Figure 3).

Figure 3 The Begin Reconciliation screen

Step 5.  Select the opening balance transaction in the Deposits and Other Credits section of the Reconcile Savings screen as shown in Figure 4.

Figure 4 Select the opening balance on the Reconcile - Savings screen.

Step 6. Confirm that the Difference field shows “0.00” and click Reconcile Now.

Step 7.  Click Cancel on the Select Reconciliation Report screen.

Normally you will print a Reconciliation Detail Report after you reconcile an account, but since you are just setting the Beginning Balance amount, click Cancel.

Step 8.  Select the Banking menu and choose Reconcile. Select “Savings” from the Account field drop-down menu. Then note that the opening balance “12,000.00” shows in the Beginning Balance field.

Step 9. Click Cancel. You have successfully set the beginning balance for this account.

Figure 5 The Beginning Balance field now shows "12,000."