Clearing Bank
Reconciliation
History
At times clients will perform an erroneous bank reconciliation. Unfortunately
QuickBooks does not have a feature to undo a bank reconciliation, leaving the
consultant (or business owner) with the arduous task of manually un-clearing
each cleared transaction in the check register. If the client has performed only
one erroneous bank reconciliation, you may still want to take the time to unclear each transaction individually and re-perform the bank reconciliation
correctly. However, if the bank reconciliation feature is hopelessly distorted, or
taking the time to clear each transaction is not cost effective, use the following
steps to reset the bank reconciliation feature so that it agrees to the current
period:
Step 1.
Perform a manual bank reconciliation for the current period,
independent of QuickBooks.
Step 2.
If the bank reconciliation reveals transactions that the client did not
enter into QuickBooks, enter each transaction in the check
register. By the end of step 2, the cash balance in QuickBooks
should agree to the book balance on the reconciliation performed
in Step 1.
Tip: To save time, summarize the unrecorded transactions using a
journal entry. Record a single credit or debit to checking for the net
amount of all adjustments and post to the appropriate offset
accounts. (e.g. Interest Income or Bank Charges)
Step 3.
Using the Bank Reconciliation feature, clear all existing
transactions (including those entered in Step 2) and enter
whatever amount necessary in the Ending Balance field to force
the difference to zero. Then click Reconcile Now. Print a Bank
Reconciliation report for your records.
Step 4.
Using a journal entry, enter a separate credit to checking for each
outstanding check and a separate debit for each deposit in transit
per the manual bank reconciliation performed in Step 1. Enter the
applicable check number in the Memo field of each credit line.
Enter an offset amount to the “Checking” account to balance the
entry. Since all credits and debits are posted to the “Checking”
account, this journal entry will not change the balance in the
“Checking” account.
Step 5.
In the “Checking” account register, clear the offsetting credit/debit
from Step 4 that you entered to balance the entry.
Note
If you are using QuickBooks 2002, you will need to clear the
offsetting entry through the Bank Reconciliation feature. Open the
Bank Reconciliation screen for the account. Using the bank
statement from your manual bank reconciliation (Step 1) enter the
bank statement ending balance in the Ending Balance field. Enter
the bank statement date in the Statement Date field. Then click
Continue. Locate and clear the offsetting entry. The difference field
should show 0.00. Click Reconcile Now and print a Reconciliation
Detail report for your records.
Step 6.
Open the Bank Reconciliation screen to confirm that the opening
balance agrees to the bank. Also confirm that the list of
outstanding checks and deposits in transit agrees to the manual
bank reconciliation from Step 1.