Hi Ola,
Thank you for getting back to me with this detailed explanation.
Here are the steps that I would suggest for getting started with this Reconciliation. You stated that at the time of your cutover as of 1 January 2017, you had a G/L Account balance of 1000 CAD. Additionally, you have five outstanding cheques which have not yet cleared the bank.
Because we need to allow for these cheques to clear in the future, we do need to record these cheques within D365Fin. In the process of recording these cheques, the Bank Account and G/L Account balances will be reduced by 500 CAD. So I would advocate that the beginning balance posted to the G/L Account and Bank Account should be 1500 CAD--this also corresponds with the Last Reconciled Balance on 31 December 2016.
1. The first step is that I believe that we have a discrepancy in the balances which should have been posted to the G/L Cash and A/P Accounts. These account balances are presently understated by 500 CAD because we still need to enter and post the outstanding transactions. The entries taken from the original trial balance should have been adjusted for the outstanding transactions. A General Journal should be posted which will be:
Cash G/L Account 500 (bal) A/P G/L Account
The resulting entry will:
debit Cash G/L Account 500
credit A/P G/L Account 500
Now the balance in the Cash Account in the G/L is 1500 CAD.
2. The next step is to get the Last Reconciled Balance into the Bank Account. We will accomplish this via a General Journal. The entry will look like this:
Bank Account 1500 (bal) Cash G/L Account
The resulting entry will:
debit Bank Account 1500
credit Cash G/L Account 1500
The effect of the above posting on the G/L will be a wash as the same Cash G/L Account will be both debited and credited.
3. We need to enter and post the outstanding cheques (that will be step 4 below), but we need something to apply these cheques to. This means that we need to post some invoices for the vendors. But we don't want to affect the G/L Accounts for Purchases or A/P. So we will ensure that the effect on G/L is a wash. To do this enter General Journals like these:
Vendor 1 -100 (bal) A/P G/L Account
Vendor 2 -100 (bal) A/P G/L Account
Vendor 3 -100 (bal) A/P G/L Account
Vendor 4 -100 (bal) A/P G/L Account
Vendor 5 -100 (bal) A/P G/L Account
The effect of the above will be a wash as the same A/P G/L Account will be both debited and credited.
4. Enter and post the outstanding cheques using the Payment Journal. There should be a line for each of the five payments. You should ensure that each of the payments is applied to one of the above invoices. Here is what I entered on my payment journal:
Vendor 1 100 (bal) Bank Account
Vendor 2 100 (bal) Bank Account
Vendor 3 100 (bal) Bank Account
Vendor 4 100 (bal) Bank Account
Vendor 5 100 (bal) Bank Account
The resulting effect on the G/L will be:
debit A/P G/L Account (via vendor accounts) a total of 500
credit Cash G/L Account (via Bank account) a total of 500
5. Finally, we are ready to do the Bank Account Reconciliation. We should have everything in place to do the reconciliation as of 31 January.
a. Enter the Balance on Statement as 1200 as from the bank.
b. Suggest Lines to populate the lower sections.
c. Mark the three cheques which have cleared.
d. Print the Bank Rec. Test Report. The balances should match and you will be able to post this reconciliation.
I know that this is involved. Please let me know what further questions you may have.
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