QB Bank Statements & "Catch-up" 0687-02 ZZqbb

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                             TO:  Interested Ministries                                                                                 FROM: Jim Bramer, Retired CPA-Auditor
                                                                                                                                                             FILE:  0687-02/qbb 

                             RE:  QB & "catch-up" using Bank Statements                                          Originated:   April 2000                              

   Below is a hypothetical Online Email thread between  Jim@bcidot.org  and one of the following MFTeam members PAT (Ministry Chief Executive), LEE: (Ministry Volunteer Treasurer), or FRAN: (Ministry Computer Bookkeeper)   Click here and go to List of threads (THRDs) at www.bcidot.org

FR:   FRAN - - .

            Hi Jim ...... trust all is well.  Thank you again for what you have shared with Lee and I with regard to using QuickBooks (TM) (QB)  at our Ministry.  Let me bring you up-to-date on our thinking.

  1.   We are not at all satisfied with the financial record keeping via our old system for the entire past fiscal year.  We can not depend on the stated numbers.

  2.    Accordingly we have decided to use QuickBooks (TM) (QB) and go back and redo this entire year.   I know ...... lots of work.... but it is so important for us to be more sure of the proper fund balances.

  3.    Since we are so oriented to separate funds, we have decided to use your Quickbooks (TM) Method Three where the accounting emphasis is to make all entries to the QuickBooks (TM) (QB) Equity accounts .... or to what we call "Church Fund Balances." 

  4.     Further,  as you suggested, to use the QuickBooks (TM) (QB) Class feature to capture types of Ministry Income and Expense. 

       When I read the contents of  2018  I have picked up from you that the best way to accomplish all of this is to work from our Bank Statements.  Please further explain this.

                        FR:  Jim@bcidot.org

        Wow, sounds like someone is going to have fun ..... I'll bet it is, Fran, right !!   
        If you took the option of entering all deposits and checks from the usual sources, you would need to go through the normal monthly QB Bank reconciliation process.  Or you would need to verify that your inputted transactions agree with what appears on the monthly Bank Statement .... plus be satisfied with deposits in transit and outstanding checks.  
        There is a more efficient way. We recommend that the inputted entries into QBs flow directly from what is on each Bank Statement. So you would  NOT be required to do the normal QB Bank Reconciliation process.


            I think I know what you mean, Jim.  If  I  understand you right, since the QuickBooks (TM) (QB) information is coming from what has cleared the bank,  then the bank balances per the Bank Statement and QuickBooks (TM) (QB)  would be the same.  Or there is no  need for me to find out what is the difference and why ..... or the usual Bank Reconciliation effort.
            Jim, don't we need to first decide on some type of  Chart of Accounts ?         

                                FR: Jim B

        Right on ....you need to conclude your Account structure, as it simplifies the transaction coding effort as well as the QB reporting endeavors.  Remember, we are not talking about accounting for Non-Cash assets like Land, building or Equipment  -- we are basically just interested in the Ministry's Operations involving Cash or Bank transactions. Let's suppose your list of Accounts would be:                  

  • 101 - Checking Account
  • 222 - Payroll Tax Clearing
  • 320 - General Fund Balance
  • 330 - Mission Fund Balance
  • 340 - Named Group Fund Balance
  • 345 - XYZ Project Fund Balance
  • 350 - Building Fund Balance

        Then you will need a Class list  .... may I suggest the following:

  • 00 - Begin Balance
  • 01 - Donation Income
  • 09 - AllElse Income
  • 41 - Salaries and Benefits
  • 43 - Office Expenses/Supplies 
  • 45 - Plant or Facility Expenses
  • 47 - Program or Ministry Expenses 
  • 49 - AllElse Expenses
  • 51 - Mortgage payment
  • 53 - Purchases of Fixed Assets
  • 90 - Transfers Between Funds 

    Coding Protocol --- every Ministry money transaction would have a code that uses five digits; XXX (for the Accounts above) and XX (for the Classes above).  
     Coding examples ..... A donation going to the General Fund would be coded 320-01;   payment for utilities would be coded 320-45:  A donation going to the Building Fund would be 350-01;  payment for the Mortgage would be 320-51;   Salary Payment would involve 320-41 less 222-49 for Payroll Tax Withheld.  When you pay the Payroll Taxes Withheld you would code it 222-49 and the 222 Account would not have a balance.

FR: FRAN.            

           OK ..... I will need to work through some of this, but I basically am with you.
            Please set forth the exact steps that you are recommending that we would do each month to accomplish this "Catch-Up" work.

                           FR: Jim B

        Then we recommend the following:(1)

  •    Place the above applicable XXX-XX code on that month's deposit slips; cancelled checks; bank charges and/or credits.  Some will require multiple XXX-XX codes for future QB split entries.

  •    Run an adder tape to provide grand totals of actual dollars for each group:  Deposits and bank credits and Checks and bank charges.

  •    Most banks have the above grand totals on their bank statement; We recommend that these adder tapes agree therewith.

  •    Provide the ultimate adder tape proof, by entering the beginning Bank Statement balance, add the above deposit adder tape amount, subtract the above checks adder tape amount and the result MUST equal the ending Bank Statement balance.

  •    From the QB Chart of Account list, highlight, double click and go to the 101 Checking Account.  Via QB2000, as needed,  get help from the HOW DO I? resources toward the upper right hand area of the screen.  The end result is that you will enter data within the respective PAYMENT or DEPOSIT columns within this 101-Checking QB Register.

  •    Between the PAYMENT and the DEPOSIT column in the QB Register is a "check off" area.  This is normally "checked off"  via the QB Bank Reconciliation process when this transaction clears the bank.  We recommend that you manually enter this 'check off' as a part of this process.  

FR: FRAN.            

   Does this mean, Jim,  that I do NOT have to do a QuickBooks (TM) (QB)  bank reconciliation at the end of the month?

                            FR: Jim B

        No.  You will need to go through this monthly QB Bank Reconciliation process. It just means that there will be no un-checked outstanding items to handle. 
        Further,  I recommend that you print out a hard copy of the report of each QB month end Bank Reconciliation effort.

FR: FRAN.            

   Looks like I have to go through the above process for each month until I get caught up.  Pray for me !!!
   Ok  ..... now what happens when I get all caught up.  Let's say that I have finished "Catching-up" October XXXX and it is now the middle of November XXXX.  Can I go ahead and enter my November XXXX deposits and checks into
QuickBooks (TM) (QB)  in the normal fashion?   
    Also, I have learned that the month end payroll checks always clear the bank in the next month ..... how should I handle these in order to get the Payroll expense into the right month?

                            FR: Jim B

     Right, Fran, you have your hands full - enter your current November XXXX transactions as you normally will in the future.  Plus also do the November XXXX QB Bank Rec.  Henceforth, bank reconciliations will include accounting for the usual uncleared deposit and check items.
     With respect to the October XXXX pay checks clearing in November XXXX:  Disregard. At some time within your year, one month is going to have, due to this dating problem, an excessive payroll expense.  Please discuss with me if this is a fiscal year end issue.

FR: FRAN.            

   Ok, Jim ..... I think we are now on the same page.  I will let you know how things go.

      Please Click here for more topics having to do with the use of "QuickBooks and Ministry Fund Accounting"  on www.bcidot.org.  and was.  UPTD: March 09, 2012