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I'm reconciling an account that has not been reconciled in over 2 years. It'd be impossible to track down every transaction. Is reconciliations discrepancy account okay?

After trying to go back and reconcile the accounts, we've found that it's going to be impossible to match every deposit or payment to each invoice or bill. The end of year discrepancy is about $16,000.00 and we've already filed our taxes (start up company with a huge loss, filing an amendment would show an even bigger loss). The thought right now is to use an "Other Expenses Account" titled something along  the lines of "Legacy Finance Adjustment", we'd post each months discrepancy against this account so things balance out. Thus it wouldn't affect our tax reporting, but it would at least get our books in better shape and allow for a reconciliation match....Is this a viable solution? It seems like the only one.

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Best answer 10-19-2018

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It is not impossible to track down every transaction. Tim...

It is not impossible to track down every transaction. Time consuming, yes, but never impossible.

You either spent $16,000 more than you recorded or recorded that much more in income. If it is outflow it should not be that difficult to match up for month 1 the transactions in QuickBooks against the statement. What is left are the items to add. You can get images from the bank for checks you did not enter to enter them now with their correct date. Then month 2, leave uncleared as uncleared and clear the added items that are on the statement.

If you showed too much in deposits you just don't clear the ones not on the statement. Or edit each deposit to be correct. If you posted, say deposits in month 1 of $90000 but it was only $85000 Then however the deposit was classified made your book balance higher and that is where you adjust.Once you get through to fiscal year end you can make an adjusting expense for that year.

Your tax CPA can tell you if amending returns is even financially prudent. If they charge more than the tax savings it isn't worth it. You can go back 3 years, I believe, and certain losses can be carried forward

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Established Community Backer ***

It is not impossible to track down every transaction. Tim...

It is not impossible to track down every transaction. Time consuming, yes, but never impossible.

You either spent $16,000 more than you recorded or recorded that much more in income. If it is outflow it should not be that difficult to match up for month 1 the transactions in QuickBooks against the statement. What is left are the items to add. You can get images from the bank for checks you did not enter to enter them now with their correct date. Then month 2, leave uncleared as uncleared and clear the added items that are on the statement.

If you showed too much in deposits you just don't clear the ones not on the statement. Or edit each deposit to be correct. If you posted, say deposits in month 1 of $90000 but it was only $85000 Then however the deposit was classified made your book balance higher and that is where you adjust.Once you get through to fiscal year end you can make an adjusting expense for that year.

Your tax CPA can tell you if amending returns is even financially prudent. If they charge more than the tax savings it isn't worth it. You can go back 3 years, I believe, and certain losses can be carried forward

Established Community Backer ***

I agree with John, one bank statement at a time, each mon...

I agree with John, one bank statement at a time, each month.  Trying to shortcut things with the IRS and with your books is not the way to start out, or even continue for that matter

When you reconcile, and tell QB to make an adjustment, QB creates an expense account titled reconciliation discrepancy and posts the adjustment to that.

Established Community Backer ***

For a large corporation $16k is not material. For a small...

For a large corporation $16k is not material. For a small business it is.  If you believe the amount is material and that the business will eventually be profitable, then it would be to your benefit to file an amendment and get an even bigger loss to use against future profits.  If you do that, you should be able to justify the expense though, so you would really need to sort out the mess.

Community Contributor *

Re: It is not impossible to track down every transaction. Tim...

 John you seem to be the guy who can answer my questions. I don't have a vast knowledge in this. Maybe you can help? Our quickbooks hasn't been reconciled in 2 years. transactions have been matched and checked but not reconciled. Should we go back, "uncheck" all transactions and reconcile one month at a time as if it were the current month? Thank you

Community Contributor *

Re: I agree with John, one bank statement at a time, each mon...

Rustler, for a similar mistake. transactions matched and checked but not completed reconciliation do you recommend "unchecking" all transactions and match and check each and everyone and reconciling each month as if it were the current one?

QuickBooks Team

Re: I agree with John, one bank statement at a time, each mon...

Thanks for joining the thread, @Spring Valley.

 

You can consider unchecking/unclear all transactions and reconcile it by month. Let me walk you through the steps on how unclear transactions.

 

If your books haven't closed yet, you can manually unclear the transactions. Here's how:

 

  1. From the left panel, click Accounting.
  2. Select Chart of Accounts.
  3. Find the appropriate bank, then click View register.
  4. Select the transaction to edit.
  5. Under Check column, click the box repeatedly to change the status to "Blank". ("C" - Cleared, "R" - Reconciled, and "Blank" - Not cleared or reconciled)
  6. Click Save.

You can read through this article for your reference: How to Unreconcile a Transaction or Undo a Reconciliation.

 

Once done, you can now start reconciling the transactions by month.

 

Also, I still encourage seeking help from your accountant. He/she could guide you which option to take based on your recording practice and business needs.

 

If you have any other concerns, feel free to leave a comment below. Have a great day.

Community Contributor *

Re: I agree with John, one bank statement at a time, each mon...

Thank you! Thank you so much for your help!

Won't this "uncheck" all transactions even the ones reconciled? I'm just looking to reconcile transactions since 2017 that have been marked and checked but months haven't been reconciled. Since 2010 until 2017 all was reconciled. It's just the last couple of years that need calibrating or something. I hope this isn't becoming too hard to explain. I"m hoping to do it in the most efficient possible so my books are accurate but concerned what certain actions may mean to the end result

QuickBooks Team

Re: I agree with John, one bank statement at a time, each mon...

It's good to see you again, @Spring Valley.

 

You can customize the date range on the Bank register page to select the months that haven't reconciled. I'd be happy to assist you with this.

 

We don't need to uncheck all transactions since you just need the specific months to be reconciled. To get started, please follow the steps below:

 

  1. Go to Chart of Accounts.
  2. Select the appropriate bank, then click View register.
  3. In the Filter icon, click the drop-down.
  4. In the All dates drop-down, select Custom.
  5. Enter the specific month in the "From" and "To" section.
  6. Click Apply.

Once done, you'll be able to see all transactions for that specific month and unclear the transactions.

 

Then, start reconciling the transactions. You can read through this article for your reference: How to Reconcile Accounts.

 

That'll record your books accurately! Please know that the Community has your back, and I'd be glad to help if you ever need further assistance.

Community Contributor *

Re: I agree with John, one bank statement at a time, each mon...

Some of the steps you give on your instructions don't appear on my quickbooks desktop.

Can I uncheck all nonreconciled transactions by simply clicking the check mark at the top of the "reconcile" screen?

Thank you

QuickBooks Team

Re: I agree with John, one bank statement at a time, each mon...

Thanks for getting back to us and providing your QuickBooks version, @Spring Valley.


The steps shared by my colleagues are for QuickBooks Online. You can follow the instructions I outlined below to unclear and reconcile your transactions in Desktop.

  1. Go to Banking menu and select Reconcile.
  2. On the Begin Reconciliation window, select the appropriate Account, Statement Date (the period you want to unclear), Ending Balance and other necessary information, then click Continue.
  3. Click the Unmark all button to unclear all of the transactions on that period and start reconciling the account.
  4. Hit Reconcile Now once done.

reconcile 1.PNG reconcile 32.PNG reconcile 3.PNG

 

Clicking the check mark at the top won’t clear your transactions. I recommend following the steps above to unmark them.


For more information about reconciliation, check out the following articles:

That should do it. Let me know how this goes and if you have additional questions. I’m more than happy to help. Take care!
 

Active Member

I have asked for help opening Pay Roll form #941 2nd quarter. Not bank reconciliation.

 
QuickBooks Team

Re: I have asked for help opening Pay Roll form #941 2nd quarter. Not bank reconciliation.

It's good to hear you in this thread, Linguine43.

 

It looks like you've created a separate thread with the same question. One of my colleagues has already shared steps on how to resolve  update errors and ho to open the 941 Form.

 

Here's the link: https://quickbooks.intuit.com/learn-support/en-us/employees-and-payroll/quick-books-pay-roll-up-date...

 

We'd love to help you more with QuickBooks Desktop. We'll be around.