SCENARIO: Complete the three bank reconciliations using the bank statement Forms in the Appendix E.

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1 BALANCING QUICKBOOKS MONTHLY SCENARIO: Complete the three bank reconciliations using the bank statement Forms in the Appendix E. The bank reconciliation must be printed in detail for the period ending before running any financial reports. Normally you would do the balancing of the reports on the last day of the month, then you would do the bank reconciliation and make your final adjustments. After the final adjustments are made you would balance the reports again. When you have balanced the bank statement for each account, then you can begin balancing QuickBooks by processing the following reports: (1) Beginning and ending period Balance Sheets (the beginning period Balance Sheet is always the previous Fiscal year and Balance sheet, June 30, 20XX), (2) A Year-to-date Profit and Loss statement by bank account. Examples: Parish Profit and Loss statement, Cemetery Profit and Loss Statement, or Mass Account Profit and Loss statement. These three statements can be found under Reports/Memorized Reports if QuickBooks was installed by the Diocese. Always start with the bank account that has the least activity. (1) Review the Mass Account bank statement for any adjustments that may need to be recorded before starting the reconciliation. In this case the NSF check will need to be a journal entry to record the adjustment. The bank fee can be added while doing the reconciliation. (2) Click the Make Journal Entry icon from the Banking Navigator. (3) Record the NSF check by debiting account 854 Announced Mass Intentions and crediting the account Mass Account for $ Date the journal entry the same date the bank used. When you receive an NSF check from the bank you can re-deposit them again to see if it clears, if it does not clear again, the NSF check cannot be deposited again - contact the individual in order to notify them of the situation. (4) Click the Reconcile icon from the Banking Navigator. (5) Change the Account field to Mass Account. (6) Change the Statement Date field to Bank Statement Ending Date of 05/31/05. (7) Input the Ending Balance of 1, (8) In the Service Charge field enter 5.00.

2 (9) In the Date field enter the date of the transaction from the bank statement of 05/31/05. (10) In the Account field enter expense account 958 Other Mass Expenses. All Mass Account Service Charges/Bank Fees should be refunded by the Parish bank account and all interest that is earned by the Mass Account should be forwarded to the Parish Account. (11) Click the Continue button. (12) Click all items (checks and deposits) that cleared the bank statement. (13) Only if the Difference field reads 0.00 can you click the Reconcile Now button. If not, click the Leave button and go back and review your statement with your check register. (14) Since this reconciliation difference is 0.00, click the Reconcile Now button. When the Reconciliation Report window comes up, click the Both field and then the Print button (for class purposes we will click the Display button). The bank statement being balanced doesn't mean we don't have more adjustments needed to be made for our accounting of the transactions. What our bank reconciliation means is that the bank agrees with the deposits and checks that we have recorded on our check register, it doesn't know if we have account coding errors or not. In order to see if we balance for the month of May we will need to do the following steps: (15) Click on the Reports Navigator. (16) Click on Memorized. (17) Double click on Mass Account Profit & Loss, then change the dates to 07/01/04 to 05/31/05.

3 07/01/04 is the beginning period date and 05/31/05 is the ending period date. We may need to modify the report by following these steps; if not then print the report. A. Click the Modify Report button. B. On the Display tab, click the Cash field for Report Basis. C. Click the Filter tab. D. Under the Account field we should have Selected Accounts and click the drop-down arrow and then click on Selected Accounts again to open the Selected Accounts window. E. Click the down arrow to review the accounts (income and expense) to make sure all accounts that are associated with the Mass Account are marked. F. Once all accounts are marked, then click the OK button. G. Click No under the Include Split Detail? field. H. Click the Header/Footer tab. I. Enter Mass Account Profit & Loss in the Report Title field. J. Click the OK button when finished. K. Click the Memorized button, then the Replace button. (18) Click on the Reports Navigator. (19) Click on Standard under Balance Sheet & Net Worth. (20) Change the date to the previous fiscal year end date of 06/30/04, then print this report. Change the date again to 05/31/05; this is our period ending date, then print the report. (21) Using the Mass Account Profit & Loss for July 2004 through May 2005 and the two Balance Sheets dated June 30, 2004 and May 31, 2005 (see Appendix F) we can now begin to balance our reports as follows: A. Take the Mass Account balance of $1, from the June 30, 2004 Balance Sheet and add it to the Total Income of on the Mass Account Profit & Loss, which will result in a new total of $1, B. Take the Mass Account balance of $940 from the May 31, 2005 Balance Sheet and add it to the Total Expenses of $ on the Mass Account Profit & Loss, which will result in a new total of $1, C. The two new totals of 1, and 1, do not agree. (off by $25.00). D. Under Open Windows click on Mass Account Profit and Loss. E. Double click on the first income account numbers amount, this will bring up a Transaction Detail by Account.

4 F. Review the transaction report under split column to make sure the only account used is the Mass Accounts bank account or one of the mass income or expense accounts. If all is in proper order, run the other two Profit & Loss statements for the Parish and Cemetery and review the split column to see if the Mass accounts were used in any of their transactions. Our error is under the Parish Profit & Loss statement account number 644. The second deposit for 05/03/05 has the Mass Account under split for $ Double click on the to bring up the deposit. G. There are two options for correcting the error: (i) Change the account 644 to a Mass Account income account number (856 Other Mass Income), then click Save & Close when finished. This will allow us to balance, then write a check out of the Mass Account coding it to 856 Other Mass Income and making it payable to Practice Church and re-deposit it into the Parish Checking and coding it to 644 Donations. (ii) Since the income account is correct, a transfer from the Mass Account to Parish Checking for $25.00 and dated 05/31/05 is needed. Although this transfer may happen on a later date in QuickBooks it should be dated on the last day of the period ending in order to balance. We will do a transfer dated 05/31/05. H. Since the Balance Sheet for 05/31/05 was the only report affected, re-run it after the transfer is processed. The 915 and 325 totals 1,240 - we are now off by See Appendix G. Notice the Mass Account balance has an odd amount of 915, not an even amount. I. Review the check register beginning with the date of 05/01/05 (assuming you have balanced July 1, 2004 to April 30, 2005) and scan the income and expense accounts to make sure they have only Mass Account income and expense numbers. Note: Check number 3 dated 05/03/05 payable to Office Max uses account number 344 Office Supplies which is a parish account number. Since the account number is correct we will do a transfer from the Parish Checking to Mass Account for on May 31, This transfer will have to be done on the bank account forms and signed by the pastor.

5 J. Again since the Balance Sheet for 05/31/05 was the only report affected, re-run after the transfer is processed. Now the Mass Account of plus the Total Expenses of $ equal the total of 1,290.00, which is the same as the total we have for our income total plus the June 30, 2004 Mass Account Balance. See Appendix H. (22) Now balance the Cemetery Checking and the Parish Checking Reports under Memorized Reports. The following corrections will need to be made in order to balance both accounts: A. In the Parish checking account, Check number 1507, dated 05/03/05, payable to Office Max, written out of Parish Checking has a coding error of $ coded to a cemetery account number 908 Cemetery Supplies. If the expense account is correct, then do a transfer from the cemetery checking to the Parish checking for dated 05/31/05, or if the expense account is incorrect then change it to the correct parish expense account. B. In the Cemetery checking account, Check number 2501, dated 05/03/05, payable to Craftsman, written out of the Cemetery Checking, but is coded to the parish expense account number 708 Equipment/Furnishings should be changed to cemetery expense account number 910 Cemetery Equipment.