I have found that all reconciliations follow one underlying rule. Here it is: "DO THE SAME AS WHERE YOU ARE GOING< AND THE OPPOSITE OF WHERE YOU LEFT.
You might be reconciling a bank statement and be going from the "bank balance" to the "book balance". Or....you might go from the "book balance" to the "bank balance'. Either way the rule still holds. BANK TO BOOK, OR BOOK TO BANK.
The item of reconcile are those items that are different on the two statements.....or things the bank did that the company did not know about (service charges or collection of a note, etc)....and things the company did that the bank did not know about (like outstanding deposits and outstanding checks, etc)..
The company deducted the checks and added the deposits on its books....right.. When reconciling you deduct the OS checks and add the OS deposits if reconciling TOWARDS the company book balance....DO THE SAME AS WHERE YOU ARE GOING. You are going toward the book balance.
If reconciling TOWARDS the bank balance you add the OS checks and subtract the OS deposits.....DO THE OPPOSITE OF WHERE YOU LEFT. You left the company.
The collected note and service charges are handled the same way. If leaving the bank you handle them the opposite way. ......AND THE OPPOSITE OR WHERE YOU LEFT. If leaving the company book balance you would handle them the same way....DO THE SAME AS WHERE YOU ARE GOING.
When going "towards" its ADDS become ADDS and SUBTRACTIONS BECOME SUBTRACTIONS.
When "leaving" its ADDS BECOME SUBTRACTIONS AND ITS SUBTRACTIONS BECOME ADDS.
I hope I'm clear. Believe me this works great.
You might be reconciling a bank statement and be going from the "bank balance" to the "book balance". Or....you might go from the "book balance" to the "bank balance'. Either way the rule still holds. BANK TO BOOK, OR BOOK TO BANK.
The item of reconcile are those items that are different on the two statements.....or things the bank did that the company did not know about (service charges or collection of a note, etc)....and things the company did that the bank did not know about (like outstanding deposits and outstanding checks, etc)..
The company deducted the checks and added the deposits on its books....right.. When reconciling you deduct the OS checks and add the OS deposits if reconciling TOWARDS the company book balance....DO THE SAME AS WHERE YOU ARE GOING. You are going toward the book balance.
If reconciling TOWARDS the bank balance you add the OS checks and subtract the OS deposits.....DO THE OPPOSITE OF WHERE YOU LEFT. You left the company.
The collected note and service charges are handled the same way. If leaving the bank you handle them the opposite way. ......AND THE OPPOSITE OR WHERE YOU LEFT. If leaving the company book balance you would handle them the same way....DO THE SAME AS WHERE YOU ARE GOING.
When going "towards" its ADDS become ADDS and SUBTRACTIONS BECOME SUBTRACTIONS.
When "leaving" its ADDS BECOME SUBTRACTIONS AND ITS SUBTRACTIONS BECOME ADDS.
I hope I'm clear. Believe me this works great.
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