Bank Reconciliation

Overview

The Bank Reconciliation screen in Master Builder is driven by the Statement Cutoff Date.  Enter the checking account you want to reconcile, and enter the cutoff date displayed on the bank statement.  If you don’t enter the exact ending date of the bank statement, the reconciliation will probably be wrong.  Master Builder does not display transactions entered after the date you enter.

To maintain accurate records, it is a good idea to reconcile accounts each month when you receive the bank statements.  It’s important to understand that the Bank Reconciliation is a worksheet.  It relates to the General Ledger, but it is not the General Ledger.

Reconciling a bank account in Master Builder is like reconciling your checkbook at home.  The bank statement and the display in screen 1-5 must match when you are done.  If not, you need to find out why it doesn’t match.

Maybe there are entries on the bank statement which aren’t in Master Builder.  If so, research them, and if they are correct, enter them in MB.  Or there could be entries in MB which aren’t on the bank statement.  If that’s the case, you need to research them, and if they don’t belong in MB, void them or credit them.

The MB Bank Reconciliation (Screen 1-5) is similar to a check register.  It displays transactions that have not cleared. As you compare the bank statement to the transactions in the Bank Reconciliation, clear the transactions listed on the bank statement by double-clicking in the Status cell next to the line item in the Bank Reconciliation screen.

Master Builder displays transactions in transaction number order. If a check number falls out of numbered sequence, Master Builder displays an asterisk (*) next to the transaction number.

The Statement Beginning Balance box displays the balance as of the previous reconciliation.  If the amount in the Statement Beginning Balance box does not match one amount displayed on your bank statement, clear all the transactions you can, then do a Trial Save (Trial Save is explained below).

When you display records for a checking account, the Statement Ending Balance box displays the balance as of the previous reconciliation. As you change the status of transactions, the amount in the Statement Ending Balance box changes.
After clearing the transactions, the ending balance in the Bank Reconciliation screen should match the ending balance of your bank statement.

Master Builder lets you save a reconciliation that is only partially completed (Trial Save).  Master Builder saves each transaction with the status that you have assigned to it. You can then return later to finish the reconciliation.  (When you display the trial reconciliation, Master Builder displays any records entered since saving the trial reconciliation.)

After completely reconciling the account with the statement and you do a Final Save (which you should not do until the Beginning and Ending Balances match the bank statement), Master Builder rolls the amount in the Statement Ending Balance box to the Statement Beginning Balance box for the next month’s bank statement.  Never perform a Final Save without printing the last Trial Save reconciliation displayed on the screen first.

Detailed Steps to Reconcile a Bank Account

To reconcile a bank account with a bank statement:
1. Open 1-5 Bank Reconciliation.
2. In the Account# box, enter the bank account number.
3. In the Statement Cutoff Date box, enter the statement ending date.
4. Click the Display button.
5. For each item you want to clear, select the item and click the Clear button.
6. Compare the amount displayed in the Statement Ending Balance box to the ending balance on the statement. If the amount in the Statement Ending Balance box does not match the ending balance on the bank statement, you need to determine the cause of the discrepancy and correct the problem.
7. On the File menu, click Save.

If you are not finished reconciling the account, click the Trial button.

If you are finished reconciling the account, click the Final button.  Never perform a Final Save without printing the last Trial Save reconciliation displayed on the screen first.

A “P” displayed with a transaction in the Record# column indicates that the transaction is from a prior year.

Before you perform a Final Save, enter any extra charges or income in 1-1 Checks and Bank Charges, 1-2 Deposits and Interest or 1-3 Journal Transactions that appear on your bank statement that you haven’t already entered in Master Builder. These include automatic transfers, interest, or check charges.

After doing everything you can do (and possibly doing a Trial Save multiple times), if the beginning or ending balance in the MB Bank Reconciliation still does not match the bank statement, or for the first time reconciliation for a brand new company, consult with Technical Support or a qualified Master Builder consultant.

It is often easier to discover errors with a printed copy of the bank reconciliation. You can then compare the records displayed in the Bank Reconciliation window with the bank statement for discrepancies.  Do a Trial Save before printing.

Some possible reasons for the Bank Reconciliation not matching the bank statement:

Incorrect posting amount; incorrect date; missing entry (maybe you weren’t informed of the transaction, like a handwritten check or debit card transaction); returned item (if the bank returns a check due to insufficient funds, reverse the check and post the charge for insufficient funds); forgery.

When you cannot reconcile an account with the bank statement, you need to determine the cause of the error. You can display all open records when you eliminate the statement cutoff date. This allows you to immediately search for transactions assigned to an incorrect date or period.

Using a Clearing Account

When recording transfers between different accounts, Master Builder will only display the transaction in the Bank Reconciliation for one of the accounts.  If you use a clearing account as an intermediate step between the accounts, you’ll see the transaction in the Bank Reconciliation for both of the accounts.  You do not want to hold a balance in the clearing account.

Example:  You want to transfer funds from Account 1000 Checking to 1030 Savings.
1.  Write a check in screen1-1 from Account 1000 Checking to Account 1050 Cash Clearing.
2.  Make a deposit in screen 1-2 from Account 1050 Cash Clearing to Account 1030 Savings.

Then the Bank Reconciliation for each account (1000 and 1030) will show the correct transaction.

Detailed Steps to use a Clearing Account to transfer funds:

1. Open 1-1 Checks/Bank Charges. In the Account# box, enter 1000 (the source account).
2. In the Check# box, enter the bank transaction number or a dummy transaction number.
3. In the Date box, enter the date of transfer.
4. In the Description box, enter a brief statement about the transfer.
5. In the Vendor box, enter the vendor number or leave it blank.
6. In the grid, do the following:
a. In the Account cell, enter 1050 (the clearing account to which you are transferring funds).
b. In the Debit Amount cell, enter the amount of the transfer.
8. On the File menu, click Save.
9. Open 1-2 Deposits/Interest. In the Account# box, enter 1030 (the destination account).
10. In the Deposit# box, enter the bank transaction number or a dummy transaction number.
11. In the Date box, enter the date of the transfer.
12. In the Description box, enter a brief statement about the transfer.
13. In the grid, do the following:
a. In the Account cell, enter 1030 (the clearing account).
b. In the Credit Amount cell, enter the amount of the transfer.
15. On the File menu, click Save.

(You can verify the complete transfer of funds by viewing the clearing account balance in 1-7 General Ledger Accounts.)

Please contact us if you would like to learn more about instituting a comprehensive training process.  Thank you.


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