Bank Reconciliation and Cash

Question

Hello, I am a new user to Sage 50 Canadian Edition and, although I will be taking a course next semester to learn this program, I have immediate questions that need answering so that I do not fall to far behind. 
 This is a two part question: 
 1) I created a invoices and then the customer either paid by cheque or cash, I chose one or the other, and both were deposited into 1060 bank account. Prior to going to the bank I created a deposit slip in Sage by first selecting the cheques that would be included in the deposit from the "select" button and then the list that presented itself with all the payment by cheque that had been entered "on or after" a time. Then on the cash side I thought that it would be the same from the "select" button but instead it only allowed entries for the denominations you would be depositing (eg. 10-$20, 5-$10 and so on) So I included those denominations and posted the deposit slip. Now I am moving on to the bank reconciliation this is the first one I have done for this company and the previous person was only doing general journal entries, no invoices or receipts, no deposit slips and certainly no reconciliations. All of that was done in excel, paper and pen method, or not done at all? The year end was hectic to say the least and terribly confusing but I think accurate. So I bring up the bank reconciliation and see that the amount that should have been deposited is in the withdrawal side of the reconciliation window and double the deposit slip minus the cash deposits are on the deposit side (so $500 cheques - $50 cash = $450 deposit)? The cash entries are also in the reconciliation window? What did I do wrong? I feel like these are double entries but then how do you do a bank deposit slip or see these entries batched to match the deposit that went into the bank? 
 2) There was a cheque from the previous fiscal year that was outstanding. The entry in that year was debit to expense account and credit to the chequing account for $150. I entered a historical entry (or whatever it was called because I can not get the same screen to pop up and can not remember what it was called, may be Outstanding entries?) Anyways I entered the $150 into that screen and it in fact was found in the reconciliation screen ready for when it cleared the bank. Unfortunately that cheque was lost and a new cheque needed to be issued. Keeping in mind how the books were done in the previous year; I went into the general journal and debited the chequing account and credit the expense account for the $150. Reversing the original entry. Then I entered an invoice the $150 plus the $20 late charge and it debit Expense account and credit chequing account. So now I have this original $150 still outstanding as a withdrawal (of course) and my new reversing entry the $150 is sitting as a deposit? So how would I deal with this because the $150 was never withdrawn and is still outstanding technically speaking and the $150 deposit is not really a deposit but corrects the monies that was taken out the previous fiscal year. On top of all that and not related to the bank reconciliation I have a $20 balance on that expense account in the general ledger report, should I be worried about this? 
 Thank you, Jennifer

Keith L · Accepted Answer

Hi Jenniferwall, 
 For your first question, as per your description, when you created the invoices, the account that you used to put the money to was 1060 bank account. When you created the deposit slip later, your deposit from and deposit to account was the same - 1060 bank account, which means you withdrew and deposited using the same account. The is the reason why you see the bank deposit shows up in your bank reconciliation with balance in both the Deposits and Withdrawals columns. In the bank reconciliation window, put a check mark in the box - Show Deposit Slip Details. The deposit slip will get broken into lines and provide the details. Suggestion to you is that you can create a new account called Cash/Cheque ready to be deposited. When you create invoices, you can put the cheque or cash that you receive to this Cash/Cheque ready to be depsoited account first. Then, when you create your deposit slip, your deposit from account will be the Cash/Cheque ready to be deposited account and your deposit to account is your bank account. This minic the real life situation. Only the deposit slip will touch your bank account but not the actual invoices. By using this method, you will only see bank deposit with a balance in the Deposits column when you look at your bank reconciliation. 
 For your second question, the solution is to put check mark besides your original $150 withdrawal and the reversing $150 deposit in your bank reconciliation to clear them. The 2 entries will offset each other and give you a net or zero. For the 3rd entry, which is the $170 withdrawal ($150+$20 late charge), you only clear it when you see this item shows up in your future bank statement. The $20 is actually a penalty you put towards yourself for later payment to your vendor. If this is reasonable, I do not see any problem. 
 Hope this clear your confusion

JenniferWall · Answer

This was a huge help, Thank you so much!

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