If you’ve heard this story before, don’t stop me, because I’d like to hear it again.   – Groucho Marx

Bank reconciliations are one of the easier things to do with Sage 50, yet we seem to get an awful lot of calls from people panicked about them.

Briefly, starting with the basics, there are a few things common to all ‘bank rec’s’.

• There is a start and end date, the period for which the account is being reconciled.
• There is an opening balance, carried forward from the closing balance of the previous day.
• There is, then, the closing balance, a number derived usually from a bank statement.
• There is a list of transactions. These are the sums flowing into and out of the account for that period.

Next, the numbers that Sage provides for the user.

• There is an outstanding amount- the dollars that were entered in Sage but did not show up at the bank when the statement was generated by the bank.
• There is a resolved amount. This is the total of a series of transactions that were created in Sage AND showed up in the bank statement.

Last, there is an unresolved amount. This is the difference between all the cash going in and out, after the late transactions have been accounted for.

If there is a balance in any of these amounts, the bank rec will still post.

However, if there is a discrepancy amount, even one cent, the bank rec will not post. A discrepancy usually tells the system that there is something wrong with how the numbers were entered.

It can be caused by a number of things- post-dating or pre-dating transactions through a general journal entry, or reversing and editing transactions multiple times, to name a few.

If the bank rec is hopelessly confused, the best solution is to reset it. It sounds scary, but it’s easy.

1. First, MAKE A COPY OF YOUR COMPANY.
   1. Go to File> Save a Copy> and save it on your desktop as ‘Bank Rec Test’ or something easy to remember.
2. Next, do all the following on the COPY.
3. Go to the chart of accounts and open the bank account you wish to reset.
4. In the ‘Reconciliations and Deposits’ tab, uncheck the ‘Save Transactions for Account Reconciliations’ box. Click on ‘Save and Close’.
5. Open that account again, and check the box, then click ‘Save and Close’.

Unchecking and re-checking that box clears any record of the system having done a bank rec on that account. It does not simply delete the previous period’s bank rec, it wipes out any bank recs ever done for that account. That’s the scary part. Here’s the better part.

You don’t have to do bank rec’s starting on the first day of the company, several years ago. That’s one of the questions I’m always asked.

If you only need to do the rec for the last month or two, you can do that.

• Set the “Statement Start Date” at the first day you want to reconcile for.
• Set the “Statement end Date” at the latest date you want to see transactions dated.
• Set the “Reconciliation Date” at today’s date. It’s simply saying what date this was done.

On the right side of the page, click the button that says ‘Add Prior Outstanding’. It will bring up a window with two boxes; the top box will show the transactions that have gone through that account in the period chosen, and by default also one month before.

Between the boxes are buttons for ‘Add’ and ‘Add All’. Usually, just click ‘Add All’ to insert all transactions into the bank rec, then press ‘OK’.

Your main bank rec screen now looks the way it did before, populated with transactions.

At this point, enter the closing balance of the bank account in the ‘Statement End Balance’ box on the top right corner of the screen. Leave the ‘Statement Opening Balance’ box empty.

You can quickly reconcile the account by clicking the check mark at the top of the transactions, between “Withdrawals” box and “Status”. Then simply uncheck the few transactions that haven’t reached your bank yet. Now, at the bottom of the window, you should see amounts in ‘Reconciled’, ‘Unreconciled’ and ‘Outstanding’. In addition, you will see an amount in the ‘Discrepancy’ line. Whatever this number is, enter it in the ‘Statement Opening Balance’ box, and this will make the discrepancy become zero.

You can now process your bank rec. if there is an amount in the ‘Unresolved’ column, you will be prompted to post this amount to a temporary holding account. I like to use ‘cash Over or Short’ or some similar account. Next month, you will most likely have an unresolved amount in the opposite direction, so you can then draw it back out of that account then.

Next time you do this, the closing balance from this reconciliation will be the new period’s opening balance.

Answers to last time’s riddle:

Here’s the original question.

Three men go out to dinner. The bill comes to $30, and they each pay $10. However, one man discovers a dirty plate and complains, so the waiter tells the owner of the restaurant, who gives the waiter $5 and instructs him to give it back to the men.

The waiter decides that you can’t split $5 three ways, and the men don’t know how much the owner gave him, so he instead gives each man $1 back, and pockets the difference. The men leave, satisfied.

The question is: the three men initially paid $30. They each got $1 back, so they only paid $27. The waiter has $2. $2 plus $27 equals $29. What happened to the other dollar?

The answer is, nothing. We’re adding from two different totals. Here’s two ways to look at it.

First, the men ultimately paid $9 each, or $27 total. The restaurant got $25, the waiter kept $2. $25 + $2 equals $27.

Second way to look at it. The men initially paid $10 each, or $30 total. Out of that, they got $3 back, and the restaurant kept $25, and the waiter kept $2. Therefore $25 + $3 + $2 equals $30.

Simple.