More Bank Reconciliation Issues – Clearing Payments That You Cannot Delete or Alter

This article deals with a particular issue you may run into from time to time when trying to reconcile a bank account. Sometimes a check payment is posted in your bookkeeping software, however, the actual check that clears the bank account is for a slightly different amount.

You may be tempted to simply login to your bookkeeping software and change and thus correct the check payment amount that is posted in your books. However, in some situations, this may not be feasible. Sometimes, for whatever reasons, you cannot change what is already posted in your bookkeeping software. One example is when you process payroll and the paycheck amount is NOT direct deposit but to be paid by writing a check. Sometimes this check payment is written for a penny difference due to tax rounding. Sometimes the check payment is written to include some reimbursement, which was not part of the payroll.

If the discrepancy is only for only penny or two, due to, most likely, rounding differences, then you can simply correct this difference in your books simply by posting a 2^nd entry called a journal entry. A journal entry is a great way to post adjustments in your books, so as to distinguish these types of entries from other real-time financial activities, such as check payments, deposits, invoices, bills, etc.

So, in our scenario here, we need to post an adjustment for one penny, so we can proceed to clear out the payroll check payment and thus reconcile our bank account.

As an example, let us say we processed a payroll check payment for a net wage amount of $2,372.61. However, to pay this, we accidentally wrote the check amount for $2,372.62 and the employee deposited this into their bank account. So, to be able to reconcile our bank account without having to delete and re-post this payroll check payment in our books, we will simply post a journal entry, dated the exact same date as the paycheck, to cover this difference.

In our example, the general journal entry will be a debit to payroll wages (to recognize the extra payroll expense) and a corresponding credit to the bank account.

Now, when you proceed with your bank reconciliation, you will have to check-off two transactions to cover this one paycheck transaction.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.