Article ID: 8672

Preparing for a Bank Reconciliation

Prior to completing your bank reconciliation, you need to gather your statements and returned checks (cheques) and verify the Bank Journal Balance in the program reconciles to the General Ledger control account for the account you plan to reconcile.

 

Verifying the Bank Journal Balance in the Program

It is good practice to verify the Bank Journal Balance in the program prior to gathering your bank statement and cleared checks. You can do this by comparing the balance on the Bank Journal to the Bank Balances window and to the General Ledger.

NOTE:

If this is your first Bank Reconciliation, ensure that you enter the correct General Bank Opening Balances and Matter Opening Balances for your Trust Bank.

Take the following steps to verify the Bank Journal Balance:

  1. Locate the Bank Journal Balance.
  2. Click Tools and select Bank Balances... to open the Bank Balances window.
  3. Select As of Today in the Balances box.
  4. Compare the Bank Journal Balance to the balance that appears in the Bank Balances window.
  5. Run the Verify Data Integrity tool if your Bank Balances do not match.
  6. Re-run the Bank Journal for the period you plan to reconcile.
  7. Run the General Ledger Statement for the period that you plan to reconcile.
  8. Compare the Balance on the Bank Journal to the Closing balance for the bank's G/L control account.

NOTE:

Refer to Balancing the G/L Reconciliation Report if the balances do not reconcile.

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Gathering documentation

After you verify the Bank Journal Balances, it is time to gather the necessary documents to reconcile your bank account.

If this is you first Bank Reconciliation in the program or if you reset your bank reconciliation, you need to gather the following items:

  • Bank statement from your financial institution
  • Any cancelled checks, debit memos, or credit memos that accompany your bank statement
  • Copies of deposit slips during the period you plan to reconcile
  • Prior period's bank reconciliation from old accounting program or hand-written reconciliation (to obtain a list of outstanding items as of the beginning of the period you plan to reconcile)

NOTE:

If a prior period's bank reconciliation is not available, compile a list of checks, receipts, and bank errors that are outstanding as of the first day of the period you plan to reconcile. These are items dated prior to the first day of the period you plan to reconcile and includes items that do and do not clear in the period.

If this is not your first bank reconciliation in the program and you did not reset the bank reconciliation, gather the following items:

  • Bank statement from your financial institution
  • Any cancelled checks, debit memos, or credit memos that accompany your bank statement
  • Copies of deposit slips during the period you plan to reconcile

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Preparing the Current Bank Statement

After gathering the documents you need to reconcile your bank account, you can organize and prepare your documents to simplify the bank reconciliation procedure.

Take the following steps to organize and prepare the bank reconciliation documents:

  1. Make a note of any service charges, interest payments, credit or debit memos, or any other item that appears on your bank statement that you did not yet enter into the program.
  2. Sort the returned checks in numerical order.
  3. Compare the bank statement to the returned checks and ensure the following:
    • all returned checks appear on the bank statement
    • checks do not appear on the bank statement that the bank did not return
    • amounts for the returned checks match the amount for them on the bank statement
  4. Compare the bank statement to the deposit slips and ensure the following:
    • all deposit slips appear on the bank statement
    • amounts for the deposit slips match the amount for them on the bank statement

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Updating the Bank Journal

After preparing your bank statement, update your Bank Journal in preparation for the bank reconciliation.

Take the following steps to update your Bank Journal:

  1. Enter a check for any debit memos or service charges that you did not yet enter into the program.
  2. Enter a receipt for any credit memos or interest that that you did not yet enter into the program.
    NOTE: You cannot enter trust checks or receipts without allocating them to a matter. Many bar associations and law societies do not allow you to create a miscellaneous matter to receive interest or to allocate service charges. Refer to your bar association of law society for the proper rules and procedures in your area.
  3. Void any NSF checks or receipts using the date that the bank returns the item.

NOTE:

Do not enter new bank errors when you update your Bank Journal. The Bank Reconciliation tool has a special feature for entering and tracking bank errors. Prior outstanding bank errors carry forward automatically. If this is your first bank reconciliation, you can enter bank errors on the Prior Items window after you open the Bank Reconciliation tool.

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