Software: MoneyWorks accounting software
The objective of Bank Reconciliation is tallying the entries in the accounting records (your ledger, be it computerized or manual bookkeeping) with the physical bank balance.
However, sometimes you may discover that there is an error between the physical bank balance and your ledger. This could be due to recording the entry more than once or a typo error (typo error is one of the common mistake made, such as entered $321.00 into the ledger instead of $312.00, which is the actual amount paid).
Assuming in the month of January you are supposed to issue a cheque payment for the amount of $6,400.00 but you have issued $6,000.00 instead. However, you have recorded $6,400.00 in your ledger, the MoneyWorks.
During the bank reconciliation for the month of January, the bank statement shows $6,000.00 while your MoneyWorks is $6,400.00; if you were to ignore the difference of $400.00 as you take into the consideration that you will issue another cheque of $400.00 to top up the differences later and you reconciled the bank.
To keep a proper set of account, you should pass a journal of $400.00 (debit your bank and credit the expense account) to correct the typo error before bank reconciliation.
In the following month, assuming you have not issued the cheque of $400.00 to top up the differences, the warning message will still prompt if you were to reconcile your bank.
The statement closing balance does not agree with the ledger balance (see the printed summary). You should not finalise a reconciliation that does not balance.
Are you sure you want to finalise a non-balancing reconciliation?
During the next month, March, if you issued a cheque of $400.00 to top up the differences; in the MoneyWorks payment transaction, simply record the date, the payee and the cheque number but zeroed off the amount (since you had already “overpaid” earlier).
|Expense account||400.00||Top up the difference for cheque #: 800100|
|Expense account||-400.00||Amount already recorded in payment transaction # 800100|
In this payment transaction, your Expense account will be zeroed off but the cheque payment detail will still keep in the MoneyWorks as an audit trail of what you did to the account.
In Bank Reconciliation, the closing balance recorded in MoneyWorks should be the physical bank closing balance stated in the Bank Statement
Now, if you were to do a bank reconciliation, enter the physical bank closing balance and select the zeroed payment transaction; both your physical bank balance and ledger (MoneyWorks) will be tallied.