QuickBooks Online: How to RECONCILE your bank statement

hi folks in this video we're going to be talking about reconciling a bank account in quickbooks online first thing we're going to do is we're going to click on the gear menu on the top right of the screen and then we're going to click on reconcile which is the fourth or fifth option in the tools column once i click on the gear menu now if you have reconciled the bank account before or if someone else has reconciled the bank account before there would be a beginning balance that would match the ending balance of the previously reconciled bank statement in this particular case we reconciled it last on january 31st 2021 so if i pull up the physical bank statement i look at that and the ending balance matches this beginning balance because right now we're about to reconcile february then we're gonna be okay if your beginning balance says zero and you don't see anything on their last statement date then you must go back to the very beginning where the bank account was created and you need to reconcile from the very beginning now there are some special tricks that i teach in my banking advanced banking reconciling course that has to do with fixing all balances fixing issues with reconciliation discrepancies entering balances mid-year or an existing account that you're just going to start at the beginning of the year all those things are going to be covered in different courses in here we're going to make the assumption that the previous reconciliation is done correctly there are no errors and you're starting exactly at the starting point that you want to start with now i have bank of america connected bank of america actually allows you to directly download the statements straight from within quickbooks so if you see a big button that says view statements you can click on that and then on the right hand you will be able to click on which month you can download now if you don't see the big view statements button and this doesn't pop up just log into your bank account as normal go to chase.com or suntrust.com or whatever go straight into it and and log in and download your statement in pdf and put it in your computer because i have access to doing this i'm going to do it through this quickly but if you don't see this shortcut to downloading it you know don't despair you'll be able to download it manually through your bank statement directly so i'm going to click on that and my bank statement pops up now this is my bank statement for the month of february don't worry this is a fake account number so you know no issue there so we're going to actually going to reconcile this but the first thing we want to do is we want to check that this beginning balance again the beginning balance of the current month i'm about to reconcile or the ending balance of the previous month we are already reconciled that would be the same number we're going to take that number and we're going to make sure that number matches 100 with the beginning balance that is in quickbooks so we're good with step number one step number two is now we're going to enter the ending balance of the current month that we're about to reconcile so we're going to copy that balance or we can just type it in there and we're going to put it in here so i'm going to paste it but i'll just put them next to each other so you kind of see where that information is coming from i'll collapse this left navigation bar so the ending date would be the last date of the statement which would be 0 2 28 20 21 okay so once i got the beginning balance confirm that it is correct ending balance i copy pasted that or i typed that from my actual bank statement i'm about to reconcile and then to the ending date i'm going to click on start reconciling okay let me expand this back in now depending on how your quickbooks is uh configured if you have uh bank feeds and the transactions are downloading automatically into quickbooks if you have already entered transactions that don't belong there i mean there's all sorts of issues that you can have in terms of getting this to say a difference of zero immediately so for now what i'll do is i'm going to click on this check all button there's a little circle there all the way on the top so all the transactions get selected and then i'm gonna click it again so zero transactions are selected so we're gonna start right at the very beginning that most people would be starting on now reconciling means that we've already entered all the stuff into quickbooks and now we are verifying that whatever quickbooks says i have uh it matches what the bank is and then anything that doesn't belong there we have to make decisions to either delete or leave for the next month there's multiple circumstances again these are things that you kind of learn um through time how to troubleshoot issues for now again we're going to be in this sort of perfect world where everything will probably reconcile but in the real world you're going to have errors and transactions that don't belong there and that sort of thing so we're going to scroll down here and we're going to take a look at just the deposit so i typically like doing that i like doing uh one part first let's do all the deposits first and then we'll do the expenses or the bank debits here there's a big filter button where i can choose what transactions type types i like to focus on here we can choose whether or not we want to see all transactions or transactions ending on that particular date so if i click on all and i'll show you and i click on apply you're going to see some transactions here dated after after february 28th so you might want to enable that sometimes or just just in case there's a transaction that belongs in february or for whatever reason it's been recorded after february but that's a very rare case typically i do want to select date and click on statement ending date that way i see transactions older than february 28 2021 but never something uh newer or after february 28 2021 okay so that's kind of the first couple of things that we can do now i'm gonna soon zoom these out a little bit and then we're also gonna take a look at this tab here that says payments and deposits so because i don't wanna show everything i'm going to click on deposits and only focus and look at the deposits then what i'm going to do is i'm going to take the information i see here and i'm going to match one to one every single transaction that's in quickbooks and in the bank so let me start with the very first one 8000 let me just zoom in i'm going to zoom in a little bit and we're going to have a little bit of a split screen effect so we got this eight thousand zero six three deposit and we're gonna go into the quickbooks side and we're gonna put a check mark on that and make sure that matches now couple things to point out in the first two columns you're to see the original transaction date this is when the quickbooks user you created the transaction and what date you picked the clear date is if the transaction was downloaded from the bank and it was matched again we discussed matching and online banking in a different video in a different course but what i'm saying is if the transaction was downloaded and it was matched with the current transaction you can see that clear date is the actual bank date that from the transaction that you matched with the actual transaction that you created which was created on 131 this happens there will usually be a couple days difference because not everything happens in real time just kind of wanted to point that out so let's go down the list the next one is 45 10 so we'll put a check mark on that next one is 3.99 we'll put a check mark on that just kind of notice that's what i'm doing let me zoom this out and we're trying to get both things on the same screen and generally you would have uh maybe this uh printed out and that way you're not using split screen i'm doing it so for the sake of of of this training so let's do the next one thirteen thousand five seventy four there it is and again i'm i'm looking out of the bank and then i'm checking it off in uh quickbooks ideally you also wanna be checking them off in your bank statement as well so you will be if you have a paper statement just put a checkbox next to it right now because i'm doing a pdf i'm just going to mark them purple in this case let's go to the next one i'll park that one and then i'll check it on quickbooks and then we have this other 13 000. let's mark that and we'll check that on quickbooks and then this 2388 we'll check that and put that matchup with quickbooks perfect the next one is 104 722 that seems like it's this big one that's in here let me just uh zoom in a little bit or maybe zoom out okay there it is so there's one of four seven seven two put a check mark on that and also mark it in the bank statement we got the 45 also here and we have 46 25 29 which is this one that's here and we'll mark that so we're good to go in terms of the transactions that matched in quickbooks and in the bank statement however there are literally three transactions missing from quickbooks they're not in quickbooks at all so what do we do well first of all you recognize what type of transactions they are so these three are deposits now those transactions might be invoices or invoice payments they could be transfers from the owner's bank account they could be transfers from different bank accounts i mean you have to pay close attention to what they are you have to look at the details in the bank and see if those have any meaning to you and you're going to create them and classify them the way they're supposed to be entered um and in some cases if if it's a deposit and there's a deposit slip you might need to actually log in into the bank bank of america look at the deposit and take a look at the specific checks that are inside of it because those checks generally have to be matched against that deposit in order for this to work now before i create them i'm going to go first into my bank feeds or my banking so let me just close the statement for a second i'm going to click here as a banking and i'm going to see if the transaction was downloaded but has not been matched yet so i'm going to click here on banking again in this video i'm focusing on reconciliation not so much focused on the banking part but i kind of want to show you the dynamic of what happens when you deal with downloads in the bank and reconciliation at the same time if you don't have your banks connected for downloading then you need to enter the transaction manually which i'll show you how to do real quick so we have here the transactions that were downloaded i'm going to click on this date column here so it's going to show me all the transactions for february that have not been downloaded and if you actually go through these deposits there's exactly one two three deposits that have not been downloaded and those probably match the missing ones from the bank statement let me just open that up and double check that and yes exactly 46 25 7 0 6 3 and 45 10. those three are missing and the reason why they weren't in the reconciliation screen is because they have not been entered into quickbooks they're actually sitting on the bank download screen waiting for you to tell it what it is now if you were creating these transactions from the bank download screen then you would click on the transaction itself and you would pick what this is so let's say for example this is uh categorized i'm going to put this under a management fee okay that's just an income account that we have and i'm going to do the categorization straight from quickbooks online bank feeds okay so i'm gonna go ahead and click on add and i now that will add it into the register if i actually go back into my reconcile screen you're gonna see that that transaction is now going to show up and now i can check it let me go back here to resume reconciling i want to filter by deposits and you're going to see that transaction that should be there or there it is it was automatically checked for us so notice that the checkbox was added automatically and then i'm going to come in here and go into my deposits and also mark that one okay so that takes care of that and that's uh the reason why the transactions were missing they were never entered in the first place now let's say for example i'm not going to create the missing transactions through the bank feeds because i'm not using bank feeds or they're not showing up there or whatever circumstances going to be you can enter these manually so for example i can come here click on the new menu and then click on deposit this is a bank deposit i'll click on bank deposit and then i can just create the deposit manually in here so i'm going to come up here and put i'm just going to put it into my management fee income account and then i'm going to manually enter that dollar amount 7063.61 so i'll put here 7063.61 and then make sure the date matches so this was in 224 0 2 24 21 and then that goes into my bank of america account that is the correct one and then i'm going to click here to save and close i manually enter the transaction now this shows up in the reconciliation screen this one doesn't get the checkbox automatically because quickbooks only automatically checks the stuff that comes from the bank assuming that that's matching because it came from the bank so i need to mark that one on both the bank statement so i'm going to mark it in the bank statement done and then i'm also going to mark it in here and i'm literally one transaction away from matching all my deposits if you look at here all my deposits add up to 175 0213 if i go into quickbooks the ones that i have marked or cleared or reconciled at this point is only 170 so i'm off by that 4 000 and change now let's assume for example that that deposit really belongs to multiple invoices so how would that work so i'm going to click on new i'm going to go into invoice and then i'll just pick a customer here and then let's say i'm gonna let's see if you have a sort of a generic um item here i'm just gonna pick an item here i got accounting and let's say that this is one invoice of 2510 and another invoice of uh of 2000. so when you add them up together you get 45 10. so put here 25 10 and we're gonna put this invoice zero one zero one twenty twenty one okay so i'm gonna go ahead and click on save okay so that invoice is created i'm gonna go ahead and click on save a new and then i'll create a different invoice i'll pick another customer here let's say this is from um february 5th 2020 and then i'm going to pick accounting and then let's say this one's going to be 2510 okay i said we set the dot the one deposit will uh basically be two uh invoices in one so we'll click on uh save and close okay now both of those are entered when i go to reconcile they're not showing up here because those are still open invoices now i'm going to go into banking and i want to get a little bit into the matching stuff so in this particular case if i wanted to match that 4510 i can actually click on that and then click on find match and i can pick the two invoices that i can essentially match with that and whoops i realized that i made them both 25 10. so let me go back into the second one i did and make that 2 000 again because the sum of the two 25 10 and the 2 000 those two will be uh match so let me go back into the matching again let me go back uh here to that deposit the 4510 there we go so in the find match screen i'm not going to select the two invoices related to this so we got the 2510 and the 2000 invoice i'm gonna click on save that's gonna receive both payments for both invoices match it with my bank feeds the transaction uh kind of goes into the register so when i click on uh gear and reconcile that transaction should be there so let me click on resume reconciling and then i'm going to again filter only to deposits and now my total deposits are 175 210.45 check with my bank statement and exactly perfect that matches a hundred percent so we're all set with the deposit side now let's take a look at the expenses so i'm going to click here where it says payments so i'm going to filter out the process won't look at the process anymore just look at payments for the time being and then i'm going to match all these payments or money coming out with the ones that are actually coming out of the bank so let's start with this 200 one and this one doesn't even seem to be here anywhere which is kind of interesting the very first one we looked at i'm gonna go ahead and sort it by payment so i get to see uh by order and see if maybe i can find the 200 one sitting there in the payments it is not let's go back into our banking and let's click on banking again as i mentioned earlier we do in-depth banking in our banking course there's a lot of new ones in terms of categorizing we're focused on the reconciliation part but yeah it could be the case where we are going to be categorizing things in here and they need to be categorized correctly before we go into banking so we got this 200 dollar payment that's paying the credit card i know that so i'm going to click on record credit card payment and then come down here select my credit card account and then click on add so again i know that because i i know my books and then that transaction will show up now while i'm in bank feeds here i want to make sure that these all these other transactions are entered there that way they're matching whatever is in uh they're being entered into the register that with the match doing the reconciliation so i know that this one right here in particular i know that this one is the same thing that's paying one of my credit cards so i'm gonna pick my credit card account called boa master and use that to pay that and then for this one in particular i know this was a reversal uh check the bounce of that management fee so i'm gonna put here uh management fee and then just reverse that income that i had uh received earlier so i'm gonna click on add so that takes care of all the transactions in february this one here uh that's sitting there the 7063 that one's still sitting there because remember we created that one in particular manually so in here i would just do the match that way i'm completely done finished with with the february transactions only thing i see here is things after february so now i can click on my gear menu click on reconcile and go back to the reconciliation process so let me click on resume reconciling i'm going to assume this in a little bit so you can see a little bit more and we said we were going to filter we've been filtering uh the payments only so we'll click there on payments and now the 200 transaction is showing up in there the checkbox was made automatically again because we did it from bank feeds and then i'm going to go in there and i'm going to mark that one so i'm going to mark it then we're going to do 11.22 which is sitting here i'm gonna mark that one and then checking this now one thing right now we're not categorizing we're not choosing whether a category is correct we're not checking for correctness all we're checking is for completeness does the transaction exist is it in the bank should it be in my books period so then we have this one for 16 let's mark that one and we'll mark it on this side see if i can shrink this a little bit more so we can get a little bit more visibility on both screens okay perfect then we have the ninety dollars so notice i have these ones sorted by um by dollar amount let's do the 13 000. let's go down here and check 13 000 and put a check mark on that perfect now i back into quickbooks i can resort this by date or by clear date and um i can now it's going to be mimicking my statement so it'll be a lot easier to follow let's see let's check so we got this 1520 which matches this one and then we have the 1292 which matches this one then we have 55294 which matches this one and at this point it's almost like watching pain dry right you're going to watch me go through all the motions here 65.92 let's mark that notice 9530 that was already marked so i just verified that i was marked so i'm going to mark it on my paper too let's do the 2800 the 2130 the 1490 the 1313 and 1022 so again i'm just going down the list this will be faster if you actually have the paper printed and you do the markings uh with a check mark okay let's see what else we have here and the 12 1202 okay so those all match so now let's do the 1.49 863 4250 3160 again kind of hoping that you're following along on the paper as well in the course that i teach for banking and bank reconciliation i actually give you a copy of the bank statement so you can follow the exercise one by one if you're just watching this video uh you can use this as a guide and do it on your own with your own bank statement but if you take my my course if i'm teaching you how to do bank recalculations i want you to do the exact same thing i'm doing in order to make this make sense all right so let's see so we got the 50 452 well mark uh that one that was marked and we got an 8120 let's mark that one five five two okay and i'm just gonna kind of follow um the last ones visually so we got 7207 46 where is the 4625 okay that was marked in there then we got the 49 85 then we have the 14 90 and then we have the uh 13 13 correct and then we're gonna mark these again i was kind of following them visually and then we got 12 36 so let's mark that one then we have 1022 okay then we have 49.85 then we have one one six and oh sorry 119 and then we have a check check 1522 for 4.99 okay that's here so let's put a checkbox on that and we're basically off by 12 so i must have missed a 12 checkbox oh there you go return item fee right here 12 okay so that's where that is and there should be a 12 somewhere there it is let's mark that and now we're in this amazing place called zero difference so that's when there's no difference between my bank and my credit card at this point i would click finish now and i would be complete now what happens if i have a missing transaction as we mentioned we enter it manually whether it's an expense or a deposit we'll do that what if i have an extra transaction a duplicate an error for example if you look at these two transactions in the bottom they have february dates on them but they don't clear until uh march so we know that we downloaded them to the bank we match them and we know they're going to show up later on so i don't need to delete this but if there's a transaction here that's been duplicated so i'm going to give you an example i'm actually going to create the duplicated transaction i'm at zero so i shouldn't be doing anything at this point but i want to show you what it looks like when you have a transaction that maybe doesn't belong there so i'm going to create a check here and we'll do a check for let me just take a dollar amount here so i'm going to do one for this 20. so let's say we have a check for 80 120. so i'm gonna go in to write check and we'll put uh let's say february 15 2021 and i'll just pick a random vendor here 7 11 and let's say this was categorized as payroll i know doesn't make any sense i'm just doing the example and that was 85.08020 i believe i'm going to click save and close if it's wrong i'll go back and change it and uh is that what it was zero to zero there it is h zero to zero i'm going to sort this by regular date and i kind of want to see them uh close to each other there we go there's my eight zero two zero eight eight one two zero okay i'll change it but again it doesn't matter because i'm gonna go back and delete it uh anyway but i kind of just want to show you what happens if we are staring at a duplicate and like all right which one do we choose which is a correct one what do we do with the one that's there um so let's sort this again by date and then we'll look at the 8120 so it's an 8120 and 215 and then an 8120 that's been marked where's the other one up here so the big question is if i you have two what do you do again you want to open each one and see which one makes the most sense so after you look at it you know maybe you will look at both you will look at the categories you'll see if it's matched to any bills if it's a bill payment and obviously the one that has the best information the most accurate is the one that stays and whatever you have in there that you know for a fact is not going to show up later on we're going to click on that transaction click on edit and just delete it because we don't need to have any um you know extra transactions in there now there's some nuances in the transactions there are from the previous year and you've already filed a tax return there's a special accounting process for you to write off those um outstanding items you have to adjust them in a very specific way which we're not going to cover in this video because that's more of troubleshooting stuff but you got to get rid of them now we have all these other ones are really old but there are zero zero uh amount so generally you just want to clear them out if there's zero amounts clear them out they're not gonna affect your reconciliation i'm still a zero difference we're good to know so i'm gonna go ahead go ahead and click on finish now and then it says you have reconciled this account i'm going to click on view reconciliation report the report is valuable for a couple of reasons you're going to get kind of a summary you're going to have your beginning balance is going to match your bank statement you're going to see your ending balance that matches your bank statement but then you have the most important thing which is the difference between the bank balance and the quickbooks balance right now quickbooks is showing a quickbooks balance of uh 213 183.15 not 218 00 32.98 why is that important because if you were to run a balance sheet so i'm going to go reports and i go to balance sheet and i'm going to run a balance sheet as of february 28th which is the state the the last balance i reconciled you're going see a balance of 213 183.15 and then when you look at your bank statement your back statement says 218 and that is where everybody starts freaking out because they say looking there i don't i don't i don't think quickbooks is accurate i don't believe quickbooks to be right because my actual bank balance that i just looked at which is 218 doesn't match my my quickbooks are saying 213. that's what that report is for let's go back to the reconcile screen and let's take a look at that report up here we'll say um history by account i'll click on that and then i can take a look at that reconciliation report so i'm gonna click on view report and we're gonna get to see why is there a difference to 18 to 13 well it's because there's this 48 49 not cleared yet and if i scroll down and look at unclear checks and payments these are essentially two checks that we wrote during february that didn't clear until march therefore my bank balance which is what i have available to spend is less than my actual bank statement balance because my bank doesn't know about these checks yet they'll know next month once they clear but they didn't know when the statement was created so the statement is only going to show you the balance based on everything that has cleared things that haven't cleared the bank doesn't know not going to show up in the statement that clearly explains that 4849 the difference between what's in your balance sheet as a report and what you can see on your bank statement so that's it for bank reconciliation of course i know there's a lot more moving parts to that a lot of you are going to have beginning balance issues a bunch of transactions that don't match missing transactions this comes with practice i have more videos on on online banking and reconciliation discrepancies i'll put those free videos from youtube in the description but i do have a major course that i teach for banking when i kind of slow this down and i do a lot of examples and i give you the ones that take the course i'll give you copies of the statements credit cards bank statements that i use that way you can follow along kind of on your own and learn of course doing it with your own bank statements with your own business that's really the best way to do it but if you're not ready to do that you want to use my examples and if you want to take that course i'll put the link to the description below and also the additional videos that you can watch in youtube and you can learn without taking a course i'm not selling you i am selling you the course but i'm not saying that you have to take a course in order to uh get this this video and the other videos the description should be sufficient but if you want to take it to the next level take a look at that a course that i have available anyway i hope that was helpful and i'll see you on the next one

Channel: Hector Garcia CPA

Views: 24,609

Rating: 4.9791121 out of 5

Keywords: quickbooks, tutorial, online, accountant, bookkeeping, accounting, 2020, quickbooks online, quickbooks tips and tricks, 2021, bank reconciliation statement, bank reconciliation accounting, bank reconciliation, reconcile bank account in quickbooks online, quickbooks online reconcile bank account, how to reconcile in quickbooks online

Id: OaUedv94SBs

Length: 31min 22sec (1882 seconds)

Published: Wed Apr 14 2021