[hamzashakaa]

In order to know the difference between the bank balance and the trial balance. You should print a statement of account from the accounting system for the period from 1-1-2008 to 31-12-2008. And the you should have a bank statement from 1-1-2008 to 31-12-2008. After that you should start from the beginning of the two statements and start to check that every movement in the bank statement is recorded in the statement of account. For example if there is a debit movement in the bank statement then there should be a credit movement in the statement of account for the same amount (if it agree just tick it on the two statements) then after checking all the debits and credits for the year there will still some movements that are recorded in your books but are not recorded in the bank and also there will be movements recorded in the bank statement but are not recorded in the books then you should highlight these movements to see why they are not recorded.

[Veena1]

I can do that but when I do reconciliation till 2008 it shows all Outstanding checks not cleared in 08 right why can't I take that figure? If I have to go through from Jan08 to Dec08 its going to take long time right?

Can I get your phone number if you don't mind?

[Veena1]

Hi

I didn't get any reply. I should solve this by EOD at any cost. So please help me.

[Veena1]

HI

I'm working it out the way you said but am totally confused now.

Trail balalnce is showing $1396810.82 as of 12/31/08.

Bank balance is shwoing $367341.39 as of 12/31/2008
Outstanding checks issued in 2008 not cleared so far are $362866.73 checks issued in 2008 cleared in 2009 $1123388.99

Now tell me what I have to find?

[hamzashakaa]

Actually this is a huge difference and the only way to know the difference is to see every movement in the bank statement from the beginning of the year and compares it to the movements in tha account statement. What I can understand is that your book balance is larger than the bank statement amount for the amount of 1,392,337. This could happen because there are some debit movements in youe book balance that are not credited in the bank statement of account. Or it could happen because there are debit movements in the bank statement that are not credited in your books.

[Veena1]

I checked all the deposits and found 2 transactions which are doubtful. How to check cheques with bank statement because Jan08 has Dec 07 checks also right (I took statement of a/c only from Jan08 to Dec08)Let me know.

[Veena1]

You said What I can understand is that your book balance is larger than the bank statement amount for the amount of 1,392,337 ,but we found cleared checks for the amount $1123388.99 as I mentioned earlier,so do I have to find the checks for the diff amount?Let me know.

[morgaine300]

Oh sigh. Please bear with me here, OK?

OK, first, Veena1, have you not done bank reconciliations every month of the year? It's extremely difficult to go back and try to reconcile an entire year all at once like that. I did accounting for 20 years, have done more bank rec's than I'd care to count, and I would be totally overwhelmed by trying to deal with reconciling for an entire year. Except maybe in a case of a teeny weeny company that had about 10 transactions a month. I've worked for mostly small companies and for most of them it would take me like 2-3 hours to do a monthly bank rec, let alone trying to do a whole year. (I did work for one company that really did only have about 10 transactions, but that's certainly not normal. That's more like my personal bank account.)

If this is new to you and that's what you're trying to do, it just seems you're out of your league. Please don't take offense over any of my comments. Just being realistic here - when you're dealing with a real company you've got to be realistic about what's going on. This isn't class time anymore. I can't fathom why someone would be expecting you do try to reconcile a whole year if you've never done it before.

Why have bank rec's not been done every month? Not only do you have the issue of having a big mess on your hands, but how can you know if your check register is correct if you never reconcile it? That's not a good business practice.

I'm also curious why you're just now reconciling '08? Does that mean nothing for '09 has been done?

Also, going through the ledger accounts is the hard way to do it. Do you not have a check register? You reconcile the check register to the bank every month. A trial balance should be reconciled with other records you have -- for instance, the receivables should match an aged report -- in the case of the cash account, reconcile that with the check register that has already had a bank rec done.

A ledger may not have all the detailed records you need to do a bank rec, especially if you're using software that is lumping things together. You may be chasing around everywhere trying to find all these different things.

If you really seriously have not done monthly reconciliations, you can actually still go back and do them. I think that would make it a little easier, because each one would be more compact, and also, if a monthly one is off, you can at least pinpoint which month it's in. Trying to do it for a full year - you're talking about gazillions of stuff that has gone on that you have to reconcile and then try to chase back when it doesn't balance. (As it's not doing.)

When you start a bank rec, the first thing you do is pull out the prior bank rec. There are going to be outstanding things on the prior month's bank rec, and you need to check through those items to see if they cleared the bank yet. (By the way, I'm going to call a "deposit in transit" an "outstanding deposit" simply so that I can call everything "outstanding.")

For instance, if you had things outstanding at the end of '07, then you need to check the bank statements for those items first to make sure they cleared. If you do not do that, you could have something really old out there that never cleared and have it throwing you off forever. And really, that last bank rec is the only good way to find out what those things are. If there's still something outstanding from '07 by the end of '08, you need to write it off anyway. If you don't write if off in '08, then it's still outstanding and it still goes onto the bank rec.

After you've done that, you can proceed to check the current stuff.

There's way more to a bank rec than just outstanding deposits and checks. There are all sorts of things that could end up on there. Honestly, the file hamzashakaa attached is a bit over-simplified for a real situation.

Basically, anything that you have recorded in you check register that never went through the bank has to be adjusted to the bank balance. This is mostly going to be outstanding checks, yes. But it will include the outstanding deposits and any electronic things you may have done, etc.

Anything that is on the bank statements that has never been recorded on the check register needs to be adjusted to the check register balance. That will mostly be any charges there were, or it could include electronic things they did that you never got recorded.

It doesn't matter what these items are. If you recorded something in your check register that is not on that bank statement, then you adjust it to the bank balance. Don't try to be fancy: if you subtracted it, subtract it on the bank rec, etc. (After all, the same mathematical thing will happen to it when it gets there.) If there's stuff on the bank statement that you don't have in your check register, then adjust it on the company balance on your bank rec.

You also need to be watching out for errors - betcha anything they do exist. When this happens you need to find two things: how much the difference between the correct and incorrect numbers are, and who made the error. (Another bad thing about not doing these monthly is if the bank made an error, it's a little late to expect them to fix it. You need to keep on those things.) If you find any errors, post what they are and we can help you with how to reconcile those.

Once you have the bank rec done and it matches, then you take all the adjustments you did for the company balance and journalize those into your books. This is why the bank rec is not going to match your trial balance: the items on the bank statement that you haven't recorded yet aren't in your trial balance if you haven't made journal entries yet. And you really don't want to make the journal entries until that bank rec balances and you know everything is OK to journalize.

You can either just journalize them like normal and run a new trial balance (making sure it does equal your check register), or you can treat them like adjusting entries. In real life we run about 10 million "adjusted" trial balances, make more adjustments and run one again. In other words, in real life we're only concerned about the final adjusted trial balance. Every other one is scrap paper and you can run as many of those as you like. (As long as those adjusting entries are recorded and kept somewhere.)

My honest suggestion would be to find someone who has experience doing this, even if you have to pay them. And then learn how to do them, doing monthly ones.

If you need to get into private matters to get this settled, you may PM me if you like. I do accounting - I understand confidentiality. It's up to you whether you want to trust me, and I take no offense if you don't. After all, you don't know me from Adam.

[sathi1690]

I am a science graduate I need details about account example journal entries,ledger posting, trial balance preparing, profit and loss account and balance sheet

[morgaine300]

sathi1690 PLEASE post you question in your own thread. This is a very long thread of someone else's and your question has absolutely nothing to do with the topic at hand.

However, if you really need that much detail about that many different accounting topics, you need a textbook not a forum post. That isn't just some simple thing someone can answer in a few paragraphs.

[Veena1]

Morgaine

I did reconciliation everymonth in 2008 long back and done reconciliation till Sep09 but when I see Trail balance as of 12/31/08 its not matching with bankstatement because of Outstanding checks issued in 08 got cleared in 09. But still its off by $274000 so my question is there any way that I can found that difference.

[morgaine300]

Only by doing everything I already described. I can't get more specific without seeing the stuff.

You can check whether the bank rec as of the end of August matched. If not, then you know you had an error prior to that. If it matches, then you at least know it's between Sept and Dec. If it weren't so far off I'd say it wasn't worth finding. Sometimes you just have to match it and charge it off to miscellaneous. (Which can create problems in future months until you get everything cleared.) But that's a large amount that needs found.

If you know it's because of outstanding checks, then you can list them and balance it. So I'm not sure how you can it's because of outstanding checks. If that isn't making them balance, obviously there is something else going on.

[Veena1]

Morgaine

I found out the issue and it has been resolved. Thank you so much for the help.

[morgaine300]

You're welcome. I'm glad you got it worked out!

[Veena1]

Morgaine

I have one more question for you. We have One company as a customer and vendor and we have rec'd credit $1200 from Vendor company but by mistake I put it under customer a/c as undeposited funds and transferred it to the bank. Now what is the best solution to change it to vendor company?

[morgaine300]

The most I can tell you is reverse the entry you did, and re-do it as a correct entry. Any error can be solved in that way (if you haven't closed the books). If it didn't go to the bank, obviously it has to come back out of there. And I'm not sure what the other side of that entry was, but that needs un-done and should go against the payable for that vendor.

If there's a software issue, that is, that it's difficult to un-do in the vendor account in the software, that would depend on what software you are using.

[Veena1]

Thank you so much and can you please help me on the below:

Hi Can somebody help in this .

On Aug 14th, One of our Partner's ( Compuville ) cash book showed a debit balance of $4,000.00.
His bank statement showed a balance of $4,270.00.
On comparison the following were found: * check issued amounting to $2,500.00 has not been cashed
* The bank rejected checks amounting to $140
* Standing order for a staples order of $700 was note noted.
* A customer paid $170 directly into the bank without any notice to Us
* Bank charges of $160 were entered in the bank statements only.
* A dividend of $250 was paid directly into the bank and not recorded in the cash
Book
* Checks for $1,650.00 were entered into the cash book and deposited in the bank
But had not been cleared (deposited).
Prepare a bank reconciliation statement for the month .

[morgaine300]

Can you please, please, please not triple-post like that. It's very confusing. And since it's a completely different question, you should have started a new thread with it.
Let us keep this over here:
https://www.askmehelpdesk.com/accoun...le-414739.html

[Veena1]

Hi Morgaine

Sorry this is the first time I'm using this site got confused.