FAQ ID # 33 - How do I perform a bank reconciliation?

FAQ ID # 33

Bank Reconciliation
Last Update : 2010/07/01

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Question / Issue

How do I perform a bank reconciliation?

Printing Reconciliation Reports

Clicking on the Print button will generate a report based upon the selection chosen. These reports will be shown in the Report Viewer window which gives you options such as printing and exporting.

Identifying Transactions in Bank Reconciliation Reports

When you print a bank reconciliation report for either cleared or uncleared items it will display codes to identify the source of the transaction. To help you understand these codes, please refer to the following FAQ: http://www.tpknowledgebase.com/afmviewfaq.aspx?faqid=1712

Verifying your General Ledger Bank Balance

The Bank Reconciliation Summary Report you printed will make reconciliation a simple process.

Compare the figure on the Bank Reconciliation Summary Report entitled “Current Bank Balance” with your current General Ledger balance.
If the two figures match, you are reconciled. If they do not match, refer to the FAQ entitled, “What if my bank reconciliation doesn't balance? located at:

What if my bank reconciliation doesn't balance?

Making Adjusting Entries

You may find transactions on your bank statement that do not appear in the Bank Reconciliation window. Items such as bank service charges, ATM withdrawals, insurance premiums, or any other bank entries such as NSF returned items and their corresponding fees may have never been entered into Tenant Pro 7. You can do that during the bank reconciliation process by selecting the Add Transactions button. This will open a window that gives you multiple options.

If you simply need to add a Service Charge or Interest Earned you can Add a “Quick” Transaction to your Bank Account. Just select the checkbox for the type of transaction you want to add, and then select a Property to tie it to and enter the other information. Click Create Transaction to automatically add a Miscellaneous Bank Transaction using the information you just entered.

To add more complex transactions you will need to use another entry window. After selecting Add a Normal Transaction you can click one of the four available buttons to open the necessary window and add a transaction.

Reviewing Reconciliation History

The History button on the Bank Reconciliation window will allow you to review the reconciliation records that have already been created. You can review what the Opening and Ending Balance was for each record.

Reconciling After Skipping More Than One Month

If you have gone more than one month without reconciling, you should reconcile each month separately, starting with your earliest statement since you began using Tenant Pro 7, and working through your most recent statement.

Reconcile each month in order, following the instructions for “Performing the Reconciliation,” mentioned above. Repeat the process for each following month, using your bank statements in order.

Reconciling Transactions Added to Previous Periods

You may need to enter transactions for periods that you have already reconciled. Any transaction that includes a bank account and that has not already been marked as Clear in your bank reconciliation process will appear for reconciliation when you next perform that function. If the transaction actually cleared the bank, but you hadn’t recorded it, you should have been out of balance during your last reconciliation. It will be necessary for you to correct this by reversing whatever transaction you performed to bring things into balance during the last reconciliation.

Unlocking Transactions and Editing Bank Reconciliations

When you complete a Bank Reconciliation by clicking the Done button, all the transactions included in that reconciliation will be locked. Tenant Pro will not allow you to save changes to those transaction records and they will have the following message:

LOCKED: You cannot save changes to this transaction

This helps ensure that nothing changes once you have reconciled your accounts. Occasionally, you may need to unlock a reconciliation to make a minor change to a transaction. You must be aware that making any change to a previously cleared transaction can have an effect on your Opening Balance for subsequent bank reconciliations. The Opening Balance displayed will always be the Ending Balance reconciled on the last statement. If you need to make a change to correct financial information, such as correcting and adjusting an entry it would be better to correct the issue by making a new adjusting entry. If you still think it is necessary to edit your reconciliation record or one of the transactions in it, complete the following steps:

Open the Bank Reconciliation window.
Click the Modify button. This will unlock the reconciliation record, as well as all the transactions contained in it.

Make your change to the bank reconciliation record, or to the other transaction you plan to change (in the window for that transaction). You can quickly go to another transaction record by double-clicking on that transaction from the Bank Reconciliation window.
When finished click Done. This will save your changes to the reconciliation record and relock the associated transaction records.

If you have changed the amount that is cleared, you may need to make a change to the Ending Balance or Opening Balance of another record. To do so, simply click in the Opening Balance field and click Save after making the change.

Answer / Solution

Bank Reconciliation

Opening the Bank Reconciliation Window

To open the Bank Reconciliation window, select Accounting>Bank Reconciliation.

Preparing for Reconciliation

Before you begin, please understand that the only way to arrive at an accurate ending balance for your bank account is to begin with an accurate opening balance. The reconciliation function will take your bank statement’s ending balance and make adjustments to it in order to arrive at the balance in the General Ledger. These adjustments come primarily from checks you have written and deposits you have made of which the bank has no knowledge. These items are called “uncleared.” “Uncleared” or “outstanding” transactions are divided into two groups: those within the ending date of your bank statement, and those beyond the ending date of your bank statement.

Prior to reconciling, you should review your bank statement for any transactions that are not in your current records. Examples of items that you might not have entered are bank service charges, interest earnings, or an automatic withdrawal of an insurance premium. Create General Journal entries or Miscellaneous Transactions entries for these transactions.

Your First Reconciliation

Your first reconciliation may take some extra time, as you must enter any uncleared transactions from your last bank statement. You may have already done this as part of your Property Beginning Balance entries. These entries may take the form of individual outstanding checks and deposits, or may be part of a lump-sum journal entry created as the beginning balance in your cash account.

The Opening Balance field represents the sum of all transactions previously marked as “Cleared” during bank reconciliation. The Opening Balance field will show a zero for your first reconciliation. The property beginning balances will be showing as uncleared items which you will need to clear to bring your first reconciliation into balance. Successive opening balances will display the total of all cleared transactions, shown as the prior month’s ending balance.

Performing the Reconciliation

When you are ready to reconcile your bank account, use the following steps to clear entries in Tenant Pro 7 that appear on your bank statement. You may use the Add Transaction button for entering additional transactions during reconciliation. If you need to close the Bank Reconciliation window before you are finished, any changes that you have made will be retained, however.

Open the Bank Reconciliation window
Click Add.

Select a bank account from the Account to Reconcile drop-down list. You will immediately be required to save the transaction in order to distinguish this reconciliation from others for this bank account.
Verify the Opening Balance, which should be the ending balance from your last month’s bank statement. If you are performing your first reconciliation, your beginning balance will be zero so it can be modified as needed.
Enter your Ending Balance from Bank Statement.
Enter the closing date of your bank statement in the Statement Date field. The Show Transaction Thru field will pick up the same date, eliminating unnecessary entries dated after the statement ending date.
Click Save. The record is now saved and ready for you to mark the transactions that have cleared.
In the two scroll boxes titled Deposits and other Increases to Cash and Checks and other Decreases to Cash, mark the Clear checkbox for the transactions that appear as cleared on your bank statement. If you wish to remove a checkmark, click on the box item again. Use the Select All button if you wish to checkmark all transactions. After using the Select All button, it changes to Clear All for your convenience.
If you need to stop before you have finished and you plan to complete the reconciliation at a later time, click Leave. This will allow you to save where you are without completing the reconciliation. Open the window again later to finish where you left off.
After all cleared items appearing on your bank statement are marked, the Difference field should show $0.00. Click Done to complete the reconciliation. If your Difference field does not show $0.00, refer to the following FAQ: http://www.tpknowledgebase.com/afmviewfaq.aspx?faqid=34

Direct Link to This FAQ

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