How to remove very old transactions from a Bank Reconciliation
Generally, if you have very old items showing on your Bank Reconciliation, they are likely either duplicate entries that were left untended or voided checks with their journal entries that have not yet been marked.
The best way to resolve these older entries is to first reconcile your Bank Reconciliation to your Bank Statement and then create a new Bank Reconciliation with the same ending balance and same date +1 as the one you just reconciled, but this one will be used only to remove any old entries.
- Reconcile accounting software against your bank statement
- First, reconcile your most recent bank statement. Do not include any of the 'extra transactions' you want to remove because this will often lead to confusion. Once your current bank reconciliation is in balance with a difference of zero, close this reconciliation by clicking the reconcile button.
- Create a new Reconciliation using the same ending balance and same statement date +1 to mark only the older entries
- Prepare your data
Before moving into the next bank reconciliation, you must take care to ensure that for every old check you want to mark and thus remove from future reconciliations, there is a reversing journal entry available to also mark. This is because the older check entry was either a duplicate or has never been cashed. If it is a duplicate, the transaction should be voided, which will create a reversing journal entry. If it has never been cashed, you may want to look into your state laws to find out your responsibility toward the payee of the check before you remove it from your reconciliation. Note: The void must be dated as of the current date as you cannot make an entry that affects your Bank Account for closed periods or for closed Bank Reconciliation dates. If you do not want to update your Expense Accounts as of the current date, consult with an accountant or your finance committee to find out which account they would like you to use.
- Do you have a voided check but no voiding journal entry? If the check has already been voided, but the voiding journal entry has been deleted, the voiding journal entry must be recreated. Do this simply by going into Journal Entries and Debiting the Bank Account and Crediting the Expense Account from the original check. Make sure you do not Credit the Bank Account even if the check you are reversing has the Bank Account as the offsetting account. See the section on How voiding a pseudo check affects the Bank Reconciliation and what to do about it.
- Also, any old deposit must also have a reversing entry. Pull up the initial deposit and note the offsetting Accounts in the Deposit grid. You must create a Journal Entry which reverses the Deposit exactly. Note: This must be dated as of the current date as you cannot make an entry that affects your Bank Account for closed periods or for closed Bank Reconciliation dates. If you do not want to update your Income Accounts as of the current date, consult with an accountant or your finance committee to find out which account they would like you to use.
- Prepare your data
- Create the New Bank Reconciliation
- Immediately create a new bank reconciliation. The new bank reconciliation will use the same ending balance as the one you just closed as well as the same ending date +1. The software will now allow you to use the same date twice, so add one day to the new Bank Reconciliation.
- Begin by marking each old check and their offsetting journal entry. When you first mark the check, the difference will increase from zero to the amount of the cleared check. When you mark the voiding journal entry, the difference will go back to 0.00. Likewise, when you mark the deposit, the difference will decrease from zero to the negative amount of the cleared deposit. When you mark the reversing journal entry, the difference will go back to 0.00. If this doesn't happen with each, there is something wrong with the reversing entries and you must make note of the ones you marked and go into each to make the changes.
- Sometimes, the voiding journal entry has been deleted due to a misunderstanding of how the ParishSOFT Accounting audit trail works.
- If you have a voided check and no voiding journal entry to mark, the voiding journal entry must be re-created. Note, the timing of the void is important because expenses are reversed on the date of a void and that affects your general ledger. If you are not sure how to date the voiding entry, please contact a professional accountant for advice.