Students can download the Trial Balance Adjustment Template here.
It’s 9 o’clock on a Saturday. There’s no regular crowd shuffling in and there is definitely no old man sitting next to me doing anything with Tonic and Gin. In fact, it’s 9AM and I am sitting at my computer looking at my e-mails. One of them is from one of our students who is frustrated and struggling to clean up the books of his client’s accounts in QuickBooks Online. The tax returns were filed already for 2012 so he just needed the books to be cleaned up from 1/1/13 forward. QuickBooks support gave him instruction for how to do it, and what they told him would work, but it would take many, many hours and those hours would turn into days. In fact they already had.
He reached out to me and asked for help. As part of our Masters and PhD programs this is included at schoolofbookkeeping.com I always respond to questions within 24 hours, usually less. QuickBooks support can help you use their product but they can’t give accounting advice. I can. The simple answer is that if the returns are filed, there is no need and in fact no point in going back and fixing individual transactions.
The answer is simple. Start a reconciliation with an ending date of 12/31/12. Check off the box at the top that says ‘hide everything after the statement’s ending date.’ Then get the Jan 2013 statement out. See if anything you checked off from 2012 didn’t actually clear until 2013. If you find anything uncheck it.
Then you’ll be left with a difference most likely. Book a journal entry to force the bank register to balance. Don’t let QuickBooks post it for you by hitting “reconcile now.” QuickBooks will want to post the difference to an expense account called “reconciling discrepancies.” This is not what we want. Create an Equity account and post the offset there. So in your journal entry depending which way the balance in the check register needs to go, you’ll either debit or credit the bank account for the difference. The other side of the entry will go to the equity account.
Next you can check off the journal entry in the bank rec so your reconciliation balances. NOW you can hit ‘Reconcile Now.” Only when the difference is 0.
You’re not quite finished yet. Now you’ll need to get out that 12/31/12 tax return. Compare the balance sheet and all of the line items from all of the schedules showing the income and expenses from the tax return with a Trial Balance Report from QuickBooks for the year.
Then prepare a journal entry to get the books to agree with the Tax Return. By the time you finish the process you will see how the bank rec entry you posted will be eliminated. All income and expenses will agree and Retained Earnings will tie. It’s like painting the last stroke on a beautiful canvas and of course you won’t need Tonic and Gin because you will have no sorrows to forget! Everything will be perfect from that day forward!
Oh and then this happened..
Comment: HI SOBs…
Thanks again Seth for the power of that information regarding reconciliation.
Boy, I wish I had signed up for this service two months ago.
One request for information:
Can you send me the link or direct me to the report in QBO
that lists the “unreconciled” transactions in the register
so I can go back and investigate.
You can find the answer here to How to Run an Uncleared Checks Report in QuickBooks Online.
Time: March 30, 2014 at 8:30 am
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