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One of the most important processes in accounting is bank reconciliation: ensuring that the transactions you record in QuickBooks match the activity in your bank.
Reconciling a bank account may sound intimidating, but we’ve broken the process up into 12 manageable steps.
Let’s get started.
Reconcile A Bank Account
Before you reconcile your bank account, make sure your QuickBooks account is up to date. If you have any last minute payments to enter or deposits to record, be sure to do so.
Once all of the transactions in QuickBooks are up to date, grab your bank statement and keep it in front of you — you’re going to need it. Then go to your home screen and click on the “Reconcile” option.
You’ll be taken to a screen that looks like this:
Step 1: Choose Account
To start, select the account you are reconciling. For our sample company, we are reconciling our checking account.
Step 2: Modify Statement Date
Find the statement date on your bank statement (it’s usually the last day of the month and can most often be found on the top of the statement). Then use the drop-down calendar to enter this date into QuickBooks.
Step 3: Verify Beginning Balance
You’ll want to double check that the beginning balance in QuickBooks matches the beginning balance on your bank statement.
If your beginning balance doesn’t match, click on the blue “What if my beginning balance doesn’t match my statement link?” or watch this QuickBooks Pro reconciliation video.
Step 4: Enter Ending Balance
Enter the closing balance on your bank statement into QuickBooks Pro.
Step 5: Add Any Service Charges
If you see any service charges on your bank statement, add the total at this time. Make sure to adjust the date and tell QuickBooks which expense account you want bank service fees to be recorded in.
Step 6: Add Any Interest Earned
If you received any interest payments from your bank on your statement, add the total at this time. Adjust the date and tell QuickBooks which income account you want to record earned interest in.
Step 7: Click Continue
Once all the information on the screen is correct, click the blue “Continue” button.
You’ll be taken to the bank reconciliation screen, which looks like this:
The Reconciliation Screen Explained:
Let me break down this screen a little bit.
At the top of the screen, you’ll see the period date. You’ll also see an option to “Hide transactions after the statement’s end date.” Clicking this means that only the transactions from this statement period and earlier will be shown. (I recommend checking this box if you have a lot of transactions that come after your statement date.)
The screen is then divided into withdrawals and deposits, just like your bank statement. On the left side of the screen, you’ll see “Checks and Payments,” or withdrawals. On the right side, you’ll see “Deposits and Other Credits.”
On the bottom of the screen, you’ll see the beginning balance, the number of items cleared (which is currently zero), and a few other totals. The main total you want to pay attention to is the “Difference” total. Currently, our difference total reads 5,171.07. By the end of the bank reconciliation process, this number should read 0.00.
Step 8: Match Transactions
Now, to actually reconcile your account, you are going to match the transactions from your bank account with the transaction in QuickBooks. Don’t worry — it’s simpler than it sounds.
Here’s our sample bank statement:
We’re going to go straight down the list to make things easy. On our sample bank statement, the first transaction is a withdrawal of $1,400 paid to Shire Views Property Management. Now we have to go back to QuickBooks and find this transaction.
We go the Checks and Payments section for withdrawals and look for a matching transaction. In this case, it’s the top transaction (see picture below). Once you find the transaction, make sure the amount in QuickBooks matches the exact amount on your bank statement. Then click the checkbox next to the proper transaction.
Tip: Printing your bank statement and marking the transactions on it as well can help you verify transactions and not get lost.
Let’s do another example.
You’ll see that the second transaction is for a withdrawal. (We ordered $655 worth of inventory from Gimli at Moria Mining on 11/1.) The first step is to go to our QuickBooks screen — on the Checks and Payments side — and look for the matching transaction.
On 11/1/2017 a check for $655 was written to Gimli. The two amounts match, so we check the box.
Continue matching transactions until you’ve matched every transaction in your bank statement.
Tip: While the amounts must always match, the dates on your bank statement may differ from the dates in your QuickBooks account. For example, you may write a check on the 5th that doesn’t get cashed and processed by the bank until the 10th. The same transaction will be dated 11/5 on QuickBooks and 11/10 on your bank statement — that’s totally fine.
Step 9: Double Check Information
When all of your transactions are added, your screen should look something like this:
Double check that all of the information looks correct.
If you look at the picture closely, you’ll see that there are three unchecked transactions in the picture above. Not every transaction will be checked. In this instance, we wrote three checks on the last day of the month. None of these checks have been cashed yet, so they don’t appear on our bank statement. We will reconcile these three transactions next month once the checks have been cashed and processed by our bank.
Only check the transactions that appear on your bank statement.
Step 10: Make Sure The Difference Is 0.00
If you did everything correctly, the “Difference” on the bottom of the screen should say 0.00.
If the difference is off (even by a couple of cents), check your QuickBooks transactions and bank statement again to see if there are any discrepancies, If you really can’t figure it out, refer to QuickBooks’ bank reconciliation troubleshooting page to learn about some common reasons why the bank reconciliation process may not be balancing properly
At this point, also check that the withdrawal and deposit total on the bottom left-hand side of the screen matches the totals on your bank statement
Step 11: Reconcile
Once the “Difference” reads 0.00, click the “Reconcile Now” button. Now your account is officially balanced!
After clicking “Reconcile Now,” you may receive a notification from QuickBooks advertising online banking. Click “OK.”
Step 12: Print Reconciliation Records
At this point, you can print the complete bank reconciliation report for your records. You can choose a basic summary report, detailed report, or both. Use the “Display” button to preview these reports before printing.
Repeat steps 1-12 for all bank and credit cards accounts. Most CPAs recommend reconciling your statements each month so you don’t miss any crucial discrepancies.
For troubleshooting issues, check out the QuickBooks Community or call QuickBooks directly. If you have any further questions, leave a comment below and we’ll do our best to help you.