About zeroing out the clearing account

Previously you entered the ledger account balances for the bank accounts, and those balances already reflect the impact of the outstanding transactions. Entering the outstanding bank transactions, however, affects the ledger balance. To clear the effect of the outstanding transactions, post a journal transaction for the net balance of the clearing account.

For example, suppose you are entering the outstanding transactions for a checking account. You enter $500 in checks and $750 in deposits. This is posted to the bank account and the cash clearing account. Because of the entries, the bank account has a net debit of $250 and the clearing account has a net credit balance of $250. Therefore, you post a journal transaction crediting the bank account and debiting the clearing account for $250.

Once you have zeroed out the clearing account, the items have no impact on the ledger account balances. You can then clear the open items when you next reconcile the account.