About clearing outstanding bank transactions

Before entering outstanding transactions, you may need to clear existing transactions. Such transactions are usually the result of entering the beginning and period balances.

If you posted individual transactions to enter the ledger account balances using Method 4 as described in the topic “Methods for entering financial activity for the current year,” clear the items that have been cleared by the bank. How?

For the first time reconciliation for a new company, work on only one account at a time. For each bank account, enter the open bank transactions that are part of the startup ledger balances. If you have written checks or made deposits that are not included in the startup ledger balances, do not enter them at this time. Wait until you have finished entering all start up data.

Because the effect of the outstanding bank transactions are already encompassed by the ledger account balances set up earlier, post the transactions to a clearing account in the period prior to the current period. Suppose you are setting up during period 7. Post each open transaction to period 6. Then post the journal transaction to the end of period 6.

Working on the outstanding items for one bank account at a time helps prevent startup errors. After entering the checks and deposits, enter the journal transaction to zero out the clearing account. Compare your results to the last reconciliation. Then proceed to the next bank account. You can use the same clearing account to enter the balances for each bank account.