Bank Reconciliation is the final step in the bookkeeping process. By reconciling to the bank statement level you are ensuring that all previous processing is correct. For that reason, a bank reconciliation done regularly can reduce the number of errors in an accounts system and make it easier to find missing purchases and sales invoices.

Timing of the Bank Reconciliation

The bank statement should be reconciled on a regular basis. Weekly is suggested but as a minimum it should be done monthly.It is also recommended that you work off an actual bank statement and not just a transaction listing. Often transaction listings can be missing transactions from other banks and don't always have running balances.

To reconcile your bank statement, have a copy of it printed out, then from COSTAR;

• Click on Financials
  
• Click on Bank Reconciliations
  

The Bank Reconciliations screen will be presented:

      

• The opening statement date and balance will already be displayed on the top right hand side of the screen. These come from the previous bank statement you reconciled.
  

• Click on down arrow on Closing Statement Date and select the date the statement finishes on
  
• Click in Closing Statement Balance and enter the closing balance of the statement
  

Reconcile the Bank Statement

Working from the earliest date off the statement, find the entries on the screen that match to the statement and tick them on the screen. This will move them to the Right Hand Side of the screen into the Cleared Bank Items area and affect the value Cleared Items. The aim is to get the Balance Remaining to be Cleared value back to a 0.00 balance.

You may come across entries that are not on the screen and these can be processed as Journals directly from the Bank Rec screen. For example, you often do not receive paperwork for Merchant Fees before you receive the charge on the bank statement. To process Merchant Fees as a journal off the Bank Reconciliation screen, click on Create Journal Entry

• Select the appropriate Accounting Period for the entry to be posted to
  
• Click on Take funds out of the bank
  
• Enter the amount of the transaction
  
• Enter a detailed description for the transaction
  

• Click on Next
  
• Set the date that the transaction appears on the Bank Statement
  
• Hit Page Down on your keyboard to get to the distribution area
  
• The first line already has the entry to the bank – leave this as is
  
• Come down to the second line
  
• Code to appropriate General Ledger account and code GST as appropriate
  

• Click on Back
  
• Find the entry just entered and tick it
  

Once Reconciled

When all entries are reconciled (ticked) and the Balance Remaining to be cleared field on the top right hand side balances to 0.00, click on the Print button next to Cleared Bank Items

• Print the Cleared Bank Items report to file with your bank statement (Note: this is the only opportunity you have to get this print out)
  
• Click on the (x) on the top right hand side of the report screen
  
• Click on the Archive button on the top toolbar to clear all the ticked transactions to history and this will also move the closing balance up to the opening balance ready for your next bank reconciliation
  
• Click on the Back button to exit the Bank Reconciliation screen
  

Print a Bank Reconciliation Report for filing with Bank Statement

• Click on GL Reports
  
• Click on Bank Reconciliation
  
• Click on New
  
• Change the description to the Bank Account and Statement Number you just archived e.g. Cheque AC After Statement 53
  
• Click on Selections
  
• Click on List
  
• Tick the appropriate Bank GL
  
• Click Ok
  
• Click Prepare
  
• Print the report
  
• Ensure the variance at the bottom of the report is 0.00. If it isn’t this should be investigated and resolved before processing any further bank statements
  
• File with your Bank Statement
  

Other common transactions to process via the Bank Reconciliation

Example 1: Customer paying directly into your bank account

• Click on Receive Payment
  
• Select the appropriate Accounting Period for the entry to be posted to
  
• Click on Put funds into the bank
  
• Enter the amount of the transaction
  
• Enter the name of the customer that has paid in the description area
  

• Click on Next
  
• Set the date that the transaction appears on the Bank Statement
  
• Hit Page Down on your keyboard to get to the distribution area
  
• The first line already has the entry to the bank – leave this as is
  
• Go to the second line
  
• Tab to the Sub-ledger column and select the customer that paid
  
• Tab to Apply to Document field
  
• Tick the Pay box on the invoice/s being paid
  

• Click on OK
  
• Click on Back
  
• On the Bank Reconciliation screen find the entry just entered and tick it. This will put the entry in the Cleared Bank Items side
  

Example 2: AMEX (or Diners) paying directly into your bank account

When you receive a payment from AMEX or Diners they normally out of the payment their merchant fee. This example shows how to account for the merchant fee and the GST. In this example the original invoice that the customer paid for with AMEX was for $1,098.90, but we have only received $1080.45 into our bank account from AMEX (less the $18.45 merchant fee)

• Click on Create Journal Entry
  
• Select the appropriate Accounting Period for the entry to be posted to
  
• Click on Put funds into the bank
  
• Enter the amount of the transaction
  
• Enter the description
  

• Click on Next
  
• Set the date that the transaction appears on the Bank Statement
  
• Hit Page Down on your keyboard to get to the distribution area
  
• The first line already has the entry to the bank – leave this as is
  
• Go down to the second line
  
• Change the value on the second line to the total of the original invoice the customer paid as a negative (-1200.40 in this example)
  
• Code to the EFT AMEX General Ledger code (usually 72001)
  
• Arrow down to the next line
  
• This value is the Merchant Fee
  
• Code to the Merchant Fee General Ledger code (usually 42401)
  
• Tab to the TaxCd column and put a G for GST in there
  
• Arrow down to the next line and the system will code the GST
  

            

• Click on Back
  
• On the Bank Reconciliation screen find the entry just entered and tick it. This will put the entry in the Cleared Bank Items side
  

When you receive the AMEX or Diners statement it needs to be reconciled to the EFT Amex (or EFT Diners) GL.

• On the Bank Reconciliation screen change the Bank GL on the top left hand side to the EFT Amex account
  
• Tick the OW batches and Journal Entry that match to the statement you have
  
• All ticked entries should balance back to zero in the top right hand side
• Click on the Print button next to Cleared Bank Items
  
• Print the Bank Reconciliation report
  
• Click on the (x) on the top right hand side
  
• Click on the Archive button