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Reconciliation Tutorial.
Reconciliation
Definition:
Asset Accounts
Liability Accounts
Clearing Accounts
Step 1
Obtain the balance per the General
Ledger
Obtain the
balance
per the
General Ledger.
Go to
Financial Link.
Click on reports.
Click on General
Ledger under
Core Reports.
Step 2
Obtain the balance per department
schedule.
Balance
per department
schedule.
The balance in
the General
Ledger does not
match the
balance of the
schedule. The
two balances
must
be reconciled
or brought into
agreement.
Reconciling Accounts
We must obtain all the activity in these two records since they
were last reconciled and compare them to find where the
difference occurs.
If the account was reconciled last month, then only the activity
in the last month must be reconciled.
If the account has not been reconciled recently, the
reconciliation process will be longer and harder to complete.
Reconciliations are much easier to do, and differences are
easier to resolve if they are done monthly. Doing
reconciliations monthly will save time and effort.
Investigate identified differences and take corrective action to
resolve differences.
Step 3
Obtain detail activity per general ledger
To obtain detail
records,
Go To Financial
Link.
Click on reports.
Click on
General
Ledger
transactions
under Detail
Reports.
Here is the
data for this
account for the
month of
January.
Tip: Many
people save
this report as
an excel file in
order to easily
use the data.
Click on
transfer file
Click Save.
Then save the
resulting excel
file to a
location of your
choosing.
Step 4
Obtain detail activity per department
Step 5
Compare the two records
The two schedules are compared to each other. The items on the
General Ledger are matched against the items on the schedule. The
remaining items are reconciling items. They are needed to make the
schedules agree or reconcile. There are three reconciling items.
In our example,
the General
Ledger detail
did not have
two items
($2,000 and
$500) that was
on the
departments
schedule, so
those two items
are needed to
adjust the
general ledger.
The general
ledger had one
item ($1,500)
that was not on
the schedule,
therefore the
schedule should
be adjusted
for that item.
Step 6
Research the adjusting items and take the
Item 1 - $2,000
This probably a
timing
difference. The
department has
recorded
receiving a
payment on
January 31st,
but it is not in
the January
General Ledger.
It will probably
be in the
February
ledger, once the
cashier has
recorded it. No
further action is
needed at his
time. However,
this item must
clear next
month.
Item 2 - $500
The department
has determined
that receivable
#2222 is
uncollectible per
University
guidelines. They
have updated the
departmental
schedule, but
have not yet
updated the
General Ledger.
A journal entry
will be necessary
to credit the
account
receivable, and
debit the
departments
revenue account.
Item 3 - $1,500
The department
did not record
payment of
invoice #5858 in
their system.
The department
should update
their schedules to
show that invoice
#5858 has been
paid.
A journal to the
General Ledger is
not necessary
since the General
Ledger is correct.
Step 7
Have the reconciliation approved.
Questions?
Edna Mendivil
x44927
Marlene Trivino
x48514