LA GL - Bank Reconciliation: Out of Balance

If your Bank Reconciliation is Out of Balance

Determine if the problem is in this month or a previous month.

  1. Enter the amount and date shown for the Opening Statement Balance and Date in the Closing Statement and Date fields and press Next.
  2. Clear any checkmarks for Checks, Deposits and Adjustments.
  3. If the Difference is zero (0.00), the problem is in the current month. Click the Back button and re-enter the current bank statement’s Closing Balance and Date. Then go to Step #3.
  4. If the Difference is not zero, the problem is in a prior month, possibly due to having reclosed the prior fiscal or posting something to a prior period.
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Locate problem in prior month.

1. Keeping the Bank Reconciliation routine open, open the Batch List routine, mark the Bank Reconciliation Reports check box and select the report for the prior month. 

  • Ending Statement Balance on the report should equal Ending Balance on the Bank Reconciliation screen (right hand side).
  • Outstanding Deposits on the report should equal Outstanding Deposits on the screen.
  • Outstanding Checks on the report should equal Outstanding Chks on the screen.
  • Adjusted General Ledger Balance on the report should equal Adjusted GL Balance on the screen. 

2. If the difference is in the Outstanding Checks or Deposits, press Next on the Bank
Reconciliation screen. An alert will tell you that you are out of balance. Select Yes.

3. Select the Outstanding button and compare this report to the Outstanding list section
on the Bank Reconciliation report. Look for anything that was added or voided since that
reconciliation was done.

4. If the GL Balance is different, the problem may be due to:

  • Adjustment entries made during the reconciliation process. If those entries are made with a date prior to the Opening Statement Date or after the Closing Statement Date on the initial screen, the routine will reconcile (Difference = 0) for that month, however, the next time you reconcile it may not. See help article on Reversing Bank Reconciliation Adjustment Entries
  • Entries made in a prior year and then that year was not closed again, or the year was closed again after making new entries that caused the balance to change. To research this difference ―  
    1. Open View Accounts, select your Checking Account and the By Date option, setting the date range to span the period for the Bank Reconciliation report. You may see the difference right away.
    2. If not, compare the Adjusted GL Balance from each month’s bank reconciliation report to the End Balance for that same period in View Accounts.
    3. Set View Accounts to cover the entire year and in the Preview, use the Search (binoculars) icon to look for the amount by which you are out of balance.
    4. Export the View Accounts report to Excel (not Send to Spreadsheet). After you have opened it in Excel, sort by gl_hist key, allowing you to view entries that were made after the last bank reconciliation. 
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Locate the problem in current month

1. If the difference is in the current month, it may be that a check was voided in the wrong period, (after the reconciliation date). See Voided Checks

2. If you still have not found the difference, gather four pieces of information:  

  • The bank statement
  • The Outstanding items from the last bank reconciliation (Batch List > BankReconciliation Report)
  • The Outstanding items from the current reconciliation (In Bank Reconciliation, press Next. An alert will inform you that you are out of balance. Select Yes and then print the Outstanding Report. Do not choose the Outstanding Check report from the first screen of the Reconciliation routine.)
  • The View Accounts report for the Checking Account in the period you are trying to reconcile  

Match items —

  1. Start by matching items on the bank statement to the outstanding items from the bank reconciliation.
  2. Next match the deposits on the bank statement to the deposits on the View Accounts report.
  3. Then match the checks on the bank statement to the checks on the View Accounts report.  At this point, everything on the bank statement should be marked
  4. Then match any outstanding items on the prior month’s reconciliation report that are not marked as still outstanding for the current month.
  5. Finally match outstanding items on the View Accounts report to the current month’s outstanding list. Anything not matched is probably the cause of your out-of-balance condition in Bank Reconciliation.
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Voided Checks

Checks voided in the wrong period are the Number 1 cause for out-of-balance conditions in the Bank
Account when trying to reconcile with your bank statement.

Find voided checks  

  1. Select General Ledger > Reports > Checks & Deposits > Check Lists.
  2. Choose the Checks by Date Written option and enter the date range that you are reconciling. 3. In Print Preview, use the Search (binoculars) icon and type an asterisk (*) to find any voided checks (plus the header which states Check numbers flagged with “*” are Voided.
  3. Write down the name of the vendors who have voided checks. (One of the voided checks could be the amount of your out-of-balance condition). After identifying the vendors, close the report.
  4. Open Accounts Payable > Define Vendors. Find the vendor record noted above and select the Check History tab. Voided checks have a zero dollar amount on this tab. Choose the check in question and select Display GL Distribution. There will be entries for the original check and for the voiding transactions. If the date for the voiding transactions is outside the date range that you are reconciling, you know this is the problem. If not, move on to the next vendor.
  5. Once you find the correct vendor, select the Print icon on the Check GL Distribution window.  

Repair a check voided in the wrong period

  1. Go to General Ledger > Individual Transactions. Your entry will be in two parts:
  2. First, exactly reverse the voiding transactions on the Check GL Distribution report from the Vendor record, using that same date. These entries will be for the GJ Journal which will generate an alert that you are trying to post an entry to a Checking Account for a journal other than CD or a CR. Select Yes in this case. 
  3. Next, enter the same voiding transactions, however, give them a date that is equal to or before the date of the bank reconciliation. Again, this is a GJ entry. After posting, your bank account will be in balance if problem was the the voided check.
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