Adjusted bank balance in reconciliation

[Sandra Michalscheck]

How can I reduce the adjusted bank balance on my bank reconciliation, without changing anything else?

My balance sheet is perfect.

My account 1110 balance is correct.

Everything is checked off that is supposed to be.

But I'm 225 too high on my adjusted bank balance figure. So my reconciliation doesn't balance.

Got to be something in my beginning figures. But can't seem to make an entry that will correct it without changing my balance sheet. Which is correct.

Sandra

[Matt]

All other things being equal, it appears that you have a check for $225 that has never cleared the bank. However, this uncleared check is not showing on your bank recon. If you believe this is the case, here's how you can correct it.

In Fund Accounting, make the following postings. Post each as separate transactions:

1). DR Expense Account - 225.00
CR 1110 225.00

2). DR 1110 225.00
CR Expense Account (same one as in entry 1) 225.00

Then, go in the bank recon and mark entry #2 as cleared, but do not mark entry #1. This should get your bank recon in balance. Because the two postings to Fund Accounting exactly offset each other, there will be no impact to your balance sheet.

[Sandra Michalscheck]

Okay. Then my next question:

Will I have to carry that unmarked entry around in my check register forever?

[Matt]

Not forever. Just long enough until you are comfortable that the check (or checks) will never clear (say 3-4 months?). Once you have reached this point you can reverse the transaction and then clear both from the recon. This will also increase your cash on hand by $225

[tborgal]

I had a similar problem happen to me with V 8.5 trying to reconcile in the first month of the year. Everthing had reconcile fine in December but would not in January. I found out, quite by accident, that there was an uncleared check from two years back. V 8.5 only carries check forward for one year, not sure if V 9 is the same. If they don't clear they disappear from the reconciliation list. In other words if you have an uncleared check from 2003 it will not show and you will not be able to reconcile your account. I found the check because I save the entire PC+ directory before starting the next year and was able to go back to that information and find the uncleared check. Once I new the the check number I was able to resolve the problem. The only thing is I can't remember if I just voided the check or not. The check still exists in the register, it just won't show up when trying to reconcile the account. Maybe this will save you from having to create the transactions suggested by Matt.

[Sandra Michalscheck]

What Tom is describing is exactly right. Except in my case, since I did not import data from my 8.5 to my 9.0, I can't seem to make an adjustment that fully remedies the problem. I assume the imbalance is contained in the amounts I put in as beginning balances. And since 9.0 does not allow for changes to beginning balances after leaving setup, I can't change that at this juncture.

The book briefly mentions an ability to make an out of balance entry (OOB), though not much explanation there. Is this something that could be done in this case?

I am loathe to exist with the choice of an unreconciled check in my register or an adjusted bank balance that is off by $225 for the duration of my brand new accounting program.

Sandra

[Matt]

Even if beginning balances are loaded incorrectly, they can be corrected afterwards through the use of journal vouchers. The fact that your bank recon is off $225 means that there is an adjustment of some type that you need to make. There is no need to live with a $225 discrepancy or uncleared check on your bank recon indefinitely.

If you are uncomfortable making the adjustments I discussed in my earlier post, I would recommend that you do nothing for 3 months regarding the $225 and see if some old check comes through and clears it. If nothing happens in 3 months I would just input a journal voucher to increase the 1110 balance by $225 to get rid of the difference.

I definitely would not recommend doing an OOB entry. OOB entries should only be done if your trial balance is out of balance (i.e. debits don't equal credits).