Categories
Check Journal Entry Reconcile

In setting up my new QuickBooks file, how do I enter the existing bank account balance with outstanding uncleared checks

It really depends upon how they were reported in previous year’s Financial Statement Report.

Let’s take examples and assume the ending bank balance per the bank statement is $11,000. There is also one check you wrote for $10,000 has not cleared the bank yet. In your books, the actual bank balance should be $1,000, right?

Example #1: You have already reported $10,000 as an expense in the previous year’s financial statement.

Since you have already reported, you do not want to expense it again in the current year. You would post $10,000 check as “Prior year” activity, with a prior date. This way, you can put the bank statement’s ending balance and have the uncleared check as outstanding, for the purpose of bank reconciliation.

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Example #2: You have not reported $10,000 as an expense in the previous year’s financial statement.

This becomes your current year financial activity when the check has cashed the bank. If you are downloading banking transactions, you would expense it when the bank posted the transaction. In setting up QuickBooks file, the bank balance is $11,000, the same as the bank statement balance.

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Categories
Chart of Accounts Journal Entry

How do I transfer Opening Balance of Balance Sheet Accounts? What would be the other side of accounting entry?

As a general rule, you will use the Equity accounts for one other side entry.

What you have are a possible two options.

If you are transferring, opening balance from all the Balance Sheet accounts (assets and liabilities), use Opening Balance Equity (under Equity type) account. Opening Balance Equity Account will Net out to zero once all the Balance Sheet accounts are transferred.

If on the other hand, certain opening balance accounts (like bank account) are already transferred, then you will need to review further how and where they were transferred. If you see zero balance on Opening Balance Equity Account, might as well directly transfer to Owner’s Draw or Owner’s Equity Account.

For AR opening balance, you will to reenter customer invoices again. Depending upon your accounting method (cash or accrual basis). In general, you will enter Invoice to Income Account on Cash basis; and on Accrual basis, you will enter other side of entry to Equity Account. Make sure to consult with your CPA Accountant or Tax Accountant. Exactly the same procedure also applies to AP opening balance. Journal Entry will not work.

For Inventory Asset opening balance, you will need to use Product/Services feature to enter inventory value and quantity. Journal Entry will not work.

For other Balance Sheet Accounts, couple of options available are to enter, but writing Journal Entry will also work fine.

For Opening Balance date, I prefer to use ending balance date. For example for 1/1/2014, I like to use Ending Balance date of 12/31/2013. Balance amount is still the same.

Same steps are applicable to Income and Expense accounts, especially you are transferring anytime during the year.

Categories
Bank Register Chart of Accounts Reports

What to do when beginning balance is way off since last bank reconciliation?

There is no simple and easy answer. There may be couple of reasons why the beginning balance could change.

1) Edited or changed transaction amount after reconciliation

2) Deleted transaction amount after reconciliation

3) Changed the “R” status manually from the bank register

In other words, prior months financials were restated after the bank reconciliation.

First, just because the beginning balance amount changed, does not necessarily mean the ending balance is wrong as well. You should first try reconciliation with the ending balance (although the beginning balance is different) to see if there is reconciliation difference due to prior months changes.

You should also check the bank register (blue navigation bar on the left > transactions > registers > double click bank account in question > go to register> look for missing “R” after reconciliation

In order to see any bank transactions were deleted after reconciliation, you should see “Audit Log” report (blue navigation bar on the left > transactions > reports > go to report type audit log


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