Transcript Post the Bank Reconciliation

Bank Reconciliation and PeriodEnd Processing
Slideshow 7
Slide No.
List of Topics
What is monthend/year-end processing?
Period-End Processing in ACCPAC
Posting Subledger Batches in G/L
Bank Reconciliation
Step 1:
Step 2:
Step 3:
Step 4:
Step 5:
Step 6:
Print the Reconciliation Status Report
Identify Unreconciled Items on the Bank Statement
Reverse Void Cheques
Process Returned Customer Cheques
Reconcile the Bank Statement
Post the Bank Reconciliation
Post the Bank Reconciliation Subledger Batches
Period-End Adjustments and Accruals
Adjustments – Merchandise Inventory
Adjustments – Recurring Transactions
Accruals
Allocation
Payroll Entry
Period-End Reports
Year-End Processing
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4
5
7
8
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10
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12
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29
What is monthend/year-end
processing?
A good accounting system is
designed to produce periodic
reports, usually at the end of
each month. At the end of the
fiscal year, annual financial
statements are prepared. The
annual reporting period (referred
to as a fiscal year) is not always
the same as the calendar year
ending December 31. A company
can adopt a fiscal year consisting
of any 12 consecutive months.
The time periods covered by
financial reports are referred to
as accounting periods.
Month-end or year-end
processing refers to a thorough
review of the transactions during
the accounting period and
making adjustments, if
necessary.
Review the GAAP related to
period-end processing.
Click to continue.
Time Period Principle
The economic life of a business can be divided
into time periods.
Objectivity Principle
The Objectivity Principle requires that all
information reflected in the accounting records
and financial statements is gathered, analyzed,
recorded and communicated using only
independent and verifiable data separate from
any influences of the gatherer and recorder.
Consistent Reporting Principle
In the preparation of financial statements, the
same accounting concepts are applied in the
same way in each accounting period.
Period-End Processing
in ACCPAC
In ACCPAC, period-end
processing (both month-end and
year-end) is started in each of
the two subsidiary ledgers,
Accounts Payable and
Accounts Receivable.
You have learned to delete
opening balance batches in the
A/P and A/R to ensure that they
do not overstate G/L account
balances and make certain that
information created in the G/L
from the subledgers is complete
and accurate. You have also
learned to produce analytical
reports that would support
financial statements in the G/L.
Click.
Study the remaining tasks in
order to complete month-end
processing.
Click to continue.
Tasks at Month/Period-End
1. Post all A/P and A/R subledger batches
in G/L – this updates the General Leger
with the transactions entered and posted in
the subledgers.
2. Reconcile bank account with G/L
accounts – verifies the accuracy of the
cash records in the company’s accounts
and catches any errors made by either the
bank or the company in recording deposits,
cheques and charges.
3. Make adjustments and accruals – brings
the accounts into proper balance
4. Produce month-end reports.
1. Posting Subledger
Batches in G/L
Subledger batches with full
transaction detail were created
automatically in G/L whenever
batches were posted in A/P and
A/R. These batches (not including,
of course, the opening balance
batches which you deleted), must
be posted to the G/L in order to
produce accurate financial
statements.
Click.
The first thing to do is to print a
hard copy of the G/L Batch List
(see right). This list contains
batches you have created/posted
in G/L and subledger batches that
were automatically created when
you posted batches in A/P and
A/R.
You need to pay particular
attention to the status of each
batch.
All deleted batches must be
investigated and verified, and all
open batches must be posted.
Click to continue.
2. Bank Reconciliation
Study why Bank Reconciliation
is an essential procedure at
period-end.
At period end, the balance in the
company’s cash and the balance
on the bank statement almost
always do not agree.
Click.
Study the possible cause of
differences between the balances
of the bank statement and the
company’s cash account.
Click.
Study the steps in doing a bank
reconciliation.
Click to continue.
Why Bank Reconciliation is essential:
Steps in Bank Reconciliation
•
To verify the accuracy of the cash
Bank
Statement
balance
and
company
1. Printrecords
the
Reconciliation
Status
Report.
in the company’s
G/L
cash
cash account balance may differ due to:
account.
2. Identify
unreconciled items on the Bank
• To
Outstanding
cheques
thatby
have
not been
•Statement.
catch any errors
made
either
cashed
by the
the
bank
the company’s
company invendors or
3. Reverse
voidor
cheques.
employees.
recording
deposits, cheques or
4. Process
returned customer cheques (NSF).
• charges.
Deposits that have been delayed or not
5. Reconcile
the Bank
and
G/L
recorded
by theStatement
bank at the
time
of
Cashprinting
account.
the bank statement.
6. Post
the Bank Reconciliation.
•
Recording
errors in the company’s books.
•
Bank errors.
Bank Reconciliation (continued)
Step 1: Print the
Reconciliation Status
Report
The first step in Bank
Reconciliation is to print a list of all
items in the company Bank
Services. This will enable you to
identify which company deposits
and payment items have not been
cleared by the bank.
Study the kind of information you
will find in Reconciliation Status
Report.
Click to continue.
Reconciliation Status Report
Bank Reconciliation (continued)
Step 2: Identify
Unreconciled Items on
the Bank Statement
You would identify the items on
your bank statement that are not
showing in your Reconciliation
Status Report. The steps in bank
reconciliation in ACCPAC vary
according to what needs to be
reconciled.
For discussion purposes, study
the November bank statement
received from the Bank of North
America. One thing that you need
to remember: the bank debits
decreases and credits increases
in your bank balance, which is
essentially the opposite of what
you do in your company’s G/L
Cash account.
Click.
Study the items that have been
taken out of your bank account
(debited) but are not in your Bank
Reconciliation Status Report.
Click to continue.
•
The loan payment consisted of $1,000.00 repayment of
principal and $110.00 interest (total $1,110.00).
•
The customer cheque returned NSF from Home
Publishing for $3,165.90.
•
Insurance for $428.00.
•
Payroll for $5,220.00.
•
Bank monthly service charge for $50.00.
Bank Reconciliation (continued)
Step 3: Reverse Void
Cheques
Once a payment cheque has been
printed and posted, it is usually
sent to the vendor who would
normally cash the cheque.
However, occasionally a cheque
must be voided for various
reasons:
• The cheque was issued
incorrecty.
• The cheque was lost.
• The cheque was never cashed.
• You want to stop payment.
In our example, one of the items
showing in the Reconciliation
Status Report is Cheque #508 for
$237.30 paid to Alf’s Office
Supplies for an order that was
never delivered. You now need to
void the cheque.
Click.
Study the appropriate Reverse
Checks window.
Click to continue.
Bank Reconciliation (continued)
Step 4: Process
Returned Customer
Cheques
In your bank statement, Cheque
#035 from Home Publishing for
$3,167.13 has been returned NSF
(Non Sufficient Funds) (see right).
You need to re-post the amount of
the cheque to the A/R customer
record and at the same time
create a subledger batch in G/L.
Fortunately, ACCPAC has the
Return Customer Checks
feature that allows you to do the
task without creating a batch in
A/R.
Click.
Study the appropriate Return
Customer Checks window.
When you click POST, the amount
is re-posted in the A/R customer
record and a subledger batch is
created in G/L. You can verify this
by displaying the A/R Aged Trial
Balance Report.
Click to continue.
Bank Reconciliation (continued)
Step 5: Reconcile the
Bank Statement
Study the SUMMARY page of the
Reconcile Statements window.
The Bank side shows the
unreconciled Bank Balance of
$15,361.08. The Deposits in
Transit amount came from the
A/R subledger batches containing
deposits that were posted in G/L
earlier. Withdrawals
Outstanding are the cheques
issued and posted in A/P and
eventually posted in G/L.
Click.
At the right, the company Book
Balance shows the current G/L
CASH account balance(Book
Balance) and the difference
between the Bank Balance as per
the statement and the CASH
balance in the company records
(Out of Balance By).
Click to continue
Bank Statement
Company Records
Reconcile the Bank
Statement (continued)
The object is to make the Adjusted
Statement Balance and the
Adjusted Book Balance equal so
that the Out of Balance by amount
is zero. You will do so by making
appropriate entries in the various
pages in the Reconcile
Statements window.
Click the RETURNS tab.
This page lists all customer
cheques that have been returned.
As far as the company’s books
are concerned, the cheque from
Home Publishing was received
and deposited. In Step 4, you
merely re-posted it, but the
original entry has not been
cleared. To clear, you would
select the entry for Home
Publishing on the RETURNS
page and change the status to
Cleared.
Click to move to the WITHDRAWALS
page.
Bank Reconciliation (continued)
Step 5: Reconcile the
Bank Statement
WITHDRAWALS Page
This page lists all payments
entered and posted in the A/P
subledger and eventually posted
in G/L.
At top right is the bank statement
showing the payment cheques
that have been cleared by the
bank. You need to change the
Reconciliation Status on the
WITHDRAWALS page from
Outstanding to Cleared.
Click.
The Outstanding Amount on the
Summary section of the
Withdrawals page is reflected on
SUMMARY page of the Reconcile
Statements window.
Click to move to the DEPOSITS page.
Bank Reconciliation (continued)
Step 5: Reconcile the
Bank Statement
DEPOSITS Page
This page lists all deposits
entered and posted in the A/R
subledger and eventually posted
in G/L.
At the bottom, the deposit that
have been cleared by the bank is
shown. You need to change the
Reconciliation Status on the
DEPOSITS page from In Transit
to Cleared (see DEPOSITS page
at top right).
Click the ENTRIES tab (above).
Bank Reconciliation (continued)
Step 5: Reconcile the
Bank Statement
ENTRIES Page
On the ENTRIES page, you would
enter the debit items in the bank
statement that are not in the
company books.
At the bottom right, debit items on
the bank statement are shown.
Study the completed ENTRIES
page (top).
Click to continue.
Bank Reconciliation (continued)
Step 5: Reconcile the
Bank Statement
SUMMARY Page
The total of the entries on the
ENTRIES page will be entered in
the Bank Entries amount on the
SUMMARY page of the Reconcile
Statements window.
Click .
Study the updated SUMMARY
page after all the entries are
completed.
Notice that the Adjusted
Statement Balance and the
Adjustment Book Balance are
equal, making the Out of Balance
by amount zero!
Click to continue.
Bank Reconciliation (continued)
Step 6: Post the Bank
Reconciliation
When the Adjustment Statement
Balance and the Adjust Book
Balance are equal, you can post
the Bank Reconciliation.
Click .
Do what the warning message
before posting. All Banks is
selected before clicking POST.
You have now completed the
Bank Reconciliation procedure.
Click to continue.
Post the Bank
Reconciliation
Subledger Batches
When you post the Bank
Reconciliation in Bank Services,
ACCPAC automaticallly creates
subledger batches. In our
example, ACCPAC created three.
These batches need to be posted
in the G/L.
Click and study the three subledger
batches that were automatically
created.
Click to continue.
Subledger batches automatically created:
•
An A/P subledger batch for the voided
cheque.
•
An A/R subledger batch for the NSF customer
cheque.
•
A BK subledger batch for the posted bank
reconciliation.
Period-End Adjustments
and Accruals
Why do you need to make
adjustments at period-end?
During an accounting period,
financial transactions are entered
in the company records according
to source documents such as
cheques received and issued,
invoices received and issued,
credit/debit memos, etc. (GAAP:
Objectivity Principle) However,
some financial events may occur
that do not generate source
documents. At period-end, these
types of transactions should be
taken into account before
producing period-end reports.
(GAAP: Full Disclosure Principle)
Click.
Study examples of financial events
that do not generate source
documents and would require
adjustments.
Click to continue.
Decrease in Office/Store Supplies
Supplies are recorded in an asset account at the time of
purchase. During the accounting period, they are consumed,
and therefore the asset account should be adjusted at periodend to reflect the decrease in their value.
Expiration of Insurance Protection
Insurance protection usually covers a specific period of time
in the future (e.g., for one or more years). It is recorded as
PREPAID INSURANCE when the premium is paid in advance.
At period-end, the value of used-up amount for insurance
protection should be calculated and recorded.
Expiration of other Prepaid Assets
Other prepaid assets that may decrease in value are:
• Land/building leases.
• Subscriptions.
• Equipment leases.
• Professional or legal fees paid in advance.
Amortization of Equipment and other Assets
In time, equipment and other assets such as vehicles, etc.
may decrease in value. At the time of purchase, each of these
assets is recorded in a separate asset account. At period-end,
the value of these assets has to be evaluated and
adjustments must be made to reflect the decrease in value.
GAAP:
Matching Principle
Click and study the principle and
example below.
Example: An accounting
consultant, Faye Anderson, bought
$600.00 worth of paper and
printing supplies in December. She
collected $2,800.00 consulting fees
from her clients that month.
Faye entered $600.00 for paper
and printing supplies as prepaid
asset at the time of purchase.
At the end of the month, she
calculated that she used up
$285.00 worth of the supplies she
purchased earlier. When Faye
prepares her monthly financial
statement for December, she
should report the $2,800.00
revenue and her expenses to earn
the revenue, including $285.00 (not
$600.00) for supplies.
Click to continue.
Matching Principle
Expenses are matched with
revenues in the period when
efforts are made to generate
the revenue.
Period-End Adjustments and
Accruals (continued)
Adjustments
Merchandise Inventory
Under the periodic inventory
system, a count and valuation of the
inventory must be done at each
period-end. COLLEGIATE’s count
was $81,765, an increase of
$3,500.
Click.
Study the adjustment entry required
in the G/L.
Click.
Study the appropriate G/L Journal
Entry in ACCPAC.
Supplies
A count of the supplies on hand was
$9,061.00, a decrease of $250.00
Click.
Study required adjustment entry in
the G/L and the appropriate G/L
Journal Entry in ACCPAC.
Click to continue.
Dr
Merchandise
Supplies
Expense
Inventory
Cr
Closing Inventory
Supplies
on Hand – Product
3500.00
250.00
3500.00
250.00
Period-End Adjustments and
Accruals (continued)
Adjustments - Recurring
Some adjustment entries are the
same every month. Rather than
typing the entries into a new batch
every month, it is more efficient to
use the Recurring Entries feature.
Amortization of Fixed Assets
Click.
Study the monthly amortization of
fixed assets.
Click.
Study the appropriate G/L Recurring
Entry in ACCPAC.
Adjustment to Prepaid Expenses
Click.
Study the monthly entry for expired
insurance and the appropriate G/L
Journal Entry in ACCPAC.
Click to continue.
Dr Insurance
Amortization
Expense
1400.00
Dr
Expense
216.00
Cr Prepaid
Accum.Expense
Amort. – Service Equip.
Cr
Cr
Accum. Amort. – Office Equipment
1100.00
216.00
300.00
Period-End Adjustments and
Accruals (continued)
Accruals
Accruals are expenses that have
been incurred but not yet invoiced
by the vendors/suppliers. An entry
must be made to properly match
revenues in the same period as the
expenses to earn them. (GAAP:
Matching Principle)
Utility Expense
A good example of accrued
expenses is utility bills. Utility
companies send bills covering a
certain period; e.g., from 15th of
one month to the 14th of the next
month (see underlined dates at
right). Estimate the average
monthly utility bill and find the daily
consumption rate. Multiply the
average daily consumption rate by
the number of days in November
(16 days).
Click.
Period-End Adjustments and
Accruals
Accruals
(continued)
Assuming that the estimated utility
consumption for November is $950,
study the appropriate journal entry.
It is credited to Accrued Liabilities
because the expense is a payable
amount at this time.
Click.
Study the appropriate G/L Journal
Entry in ACCPAC.
Click to continue.
Dr
Utility Expense - Clearing
Cr
Accrued Liabilities
950.00
950.00
Period-End Adjustments and
Accruals (continued)
Allocation
One of the advantages of
ACCPAC over entry-level
accounting software is its
capability to allocate revenues
and/or expenses to more than one
account. This feature, referred to
as Auto Allocation, is a timesaving feature.
Click.
Study the Detail page of the
RENT EXPENSE CLEARING
account.
Click the ALLOCATION tab.
Study the G/L accounts under the
RENT EXPENSE CLEARING
account and the percent of
allocation for each account.
Click.
Study the appropriate Create
Allocation Batch window. You can
then post the batch in the G/L.
Click to continue.
Period-End Adjustments and
Accruals (continued)
Payroll Entry
COLLEGIATE does not use the
ACCPAC Canadian Payroll
module to process the pay for its
employees. If ACCPAC payroll is
used, the payroll journal entry
would be created as a subledger
batch from the payroll module.
Instead, COLLEGIATE uses the
payroll service offered by the
Bank of North America, NorPay.
NorPay deposits the net pay for
each employee in his or her bank
account and then debits
COLLEGIATE’s bank account for
the total net pay. The payroll bank
debit was processed in the bank
reconciliation. NorPay provides
COLLEGIATE with several payroll
reports including the payroll
journal entry. This journal entry
must now be manually entered as
a general journal entry.
Study COLLEGIATE’s payroll
journal entry for November.
Click.
Payroll Journal Entry for November
Dr
Dr
Dr
Dr
Dr
Dr
Salary Expense - Service
Salary Expense - Product
Salary Expense – Office
Benefit Expense – Service
Benefit Expense – Product
Benefit Expense – Office
Cr CPP Payable
Cr EI Payable
Cr Income Tax Withholding Payable
Cr Payroll Clearing
2100.00
2900.00
1100.00
310.00
420.00
170.00
410.00
320.00
1050.00
5220.00
Period-End Adjustments and
Accruals
Payroll Entry (continued)
Note that the net pay in the
general journal entry is credited to
the PAYROLL CLEARING
account. In the bank
reconciliation, the net pay was
credited to bank and debited to
Payroll Clearing. If there are no
errors in either the bank
reconciliation or the payroll entry,
the balance in the Payroll Clearing
account at the end of the month
will be zero.
Payroll Journal Entry
Click.
Study the completed G/L Journal
Entry window for COLLEGIATE’s
November payroll.
Click to continue.
Dr
Dr
Dr
Dr
Dr
Dr
Salary Expense - Service
Salary Expense - Product
Salary Expense – Office
Benefit Expense – Service
Benefit Expense – Product
Benefit Expense – Office
Cr CPP Payable
Cr EI Payable
Cr Income Tax Withholding Payable
Cr Payroll Clearing
2100.00
2900.00
1100.00
310.00
420.00
170.00
410.00
320.00
1050.00
5220.00
Period-End Adjustments and
Accruals
Period-End Reports
There are five reports that should
be printed, reviewed and filed at
period-end. Click each one below
and study the description at the
right.
Batch Status Report
Posting Journals
Source Journals
Transactions Listing
Trial Balance
The text will give you step-by-step
instructions on how to print each
one of them.
Click to continue.
Posting Journals
The printed posting journals are a part of the permanent
hard copy accounting records. They are a record of all the
Batchposted
Status
Report
entries
to the
General Ledger during the month.
Source
Transactions
Journals
Listing
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Year-End Processing
When you are ready to begin
entering transactions for a new
fiscal year, you would use the
Create New Year function.
Click.
Study the description of the
Create New Year function.
Click.
After running the Create New Year
process, you should run the
Period-End Maintenance option.
Study the tasks that you can
perform using this option.
Click to continue.
Create New Year
Period-End
youentries
to: that
Create NewMaintenance
Year creates allows
and posts
transfer the balances of the income statement
(income and expense accounts) to the RETAINED
•
Delete Account History older than the number
EARNINGS account specified in the G/L Options
of years specified to keep in the G/L Options.
window (under a manual accounting system this is
This saves storage space on the disk drive.
known as a Closing Entry). A posting journal is
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Reset
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company
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for the allows
new year.
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account,
ACCPAC
you to specify
the applicable segment codes to which to close.
Before running the Create New Year process, you
must create a fiscal calendar for the new year using
Common Services Fiscal Calendar window.
More…
Go back to your text and proceed
from where you have left off.
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