Module 4: Reconciliation

Where we are in the workflow: Invoice it → Track it → Collect it → Categorize it → Reconcile it → Report it. You have recorded what customers owe and pay (Module 2) and categorized what happens in the bank (Module 3). Reconciliation is the proof that your work is right.

Module goal: You will be able to reconcile bank and credit card accounts against statements, handle beginning balances, track down discrepancies with a repeatable method, avoid the shortcuts that hide errors, and produce reconciliation reports that you can stand behind.

Running case continues: It is early October. Bright Path Cleaning Co. has September's bank statement and credit card statement in hand. Dana Reyes asks: "How do I know my QuickBooks numbers are actually right?" Reconciliation is your answer.

Key Terms for This Module

• Reconciliation: comparing the books to the bank or card statement, item by item, to confirm they agree.
• Statement ending balance: the closing balance printed on the statement. This is the number you reconcile to.
• Cleared: a transaction that appears on the statement and is ticked off in the reconciliation.
• Outstanding (uncleared) check: a check written and recorded in QBO that has not yet been cashed, so it is not on the statement.
• Deposit in transit: a deposit recorded in QBO that has not yet appeared on the statement.
• Register balance: the account balance in QBO, including items that haven't cleared.
• Difference: the gap between the statement and your cleared items. The goal is $0.00.
• Discrepancy: any transaction that differs between the books and the statement.

Lesson 4.1: Bank Reconciliation

Learning Objectives

• Explain why reconciliation matters and what it proves.
• Describe the relationship between statement balance, outstanding items, and register balance.
• Complete a bank reconciliation in QBO step by step.

Content and Theory

Categorizing the bank feed (Module 3) tells you each transaction was recorded. It does not prove the records are complete and correct. A feed can miss a transaction, an excluded item can go unnoticed, a duplicate can hide, and a typo can change an amount. Reconciliation is the control that catches all of these.

It also protects the client. Unreconciled books can hide fraud, bank errors, missed payments, and double-counted income.

Three balances to understand:

• Statement ending balance: what the bank says at the statement date.
• Cleared balance: your beginning balance plus everything you have ticked as cleared. When reconciling, this must equal the statement ending balance.
• Register balance: what QBO shows for the account, including items that haven't cleared yet.

The relationship:

• Statement ending balance
• minus outstanding checks and payments (written but not yet cleared)
• plus deposits in transit (recorded but not yet on the statement)
• equals the QBO register balance on the statement date.

If that relationship holds, the books and the bank agree, and any remaining gaps are only timing.

Two rules you must always follow:

1. Reconcile to the statement, not the feed. Use the bank's official statement (PDF or the statement's ending balance), never the "current balance" shown online today. Today's balance includes activity after the statement date.
2. The goal is a $0.00 difference, reached by correcting real errors, never by forcing it.

Step-by-Step Walkthrough

1. Gather the bank statement for the period (PDF) and note the beginning balance, ending balance, and closing date.
2. Before you start, finish processing the bank feed for the period (Module 3) so all transactions are in QBO.
3. Go to Accounting, then Reconcile (or gear icon, then Reconcile) and select the account.
4. Enter the statement ending date and statement ending balance from the statement.
5. Check that the beginning balance shown by QBO equals the beginning balance printed on the statement. If it doesn't, stop and see Lesson 4.3.
6. Click Start reconciling.
7. Work down the statement line by line. For each line, tick the matching transaction in QBO under Deposits and other credits or Checks and payments.
8. Compare the counts and totals QBO shows for ticked deposits and payments to the totals printed on the statement.
9. When the Difference is $0.00, click Finish now.
10. Open and save the Reconciliation Report (Lesson 4.6).

Real-World Example

Bright Path's September checking statement (…4417): Beginning balance $4,200.00. Deposits and credits total $3,840.87 (5 items). Checks and withdrawals total $2,438.72 (15 items). Ending balance $5,602.15.

Solution breakdown:

1. Enter statement ending date September 30 and ending balance $5,602.15.
2. Confirm QBO's beginning balance shows $4,200.00.
3. Tick the five deposits (the $2,000 owner contribution, the $240 and $1,450 bank deposits, the $150 same-day sale, and $0.87 interest). QBO should show 5 items totaling $3,840.87.
4. Tick the fifteen payments. QBO should show 15 items totaling $2,438.72.
5. Check the math: $4,200.00 + $3,840.87 − $2,438.72 = $5,602.15. The difference is $0.00.
6. Click Finish now.

Because Modules 2 and 3 were done correctly (matches, transfers, and splits), the reconciliation works on the first try. That is how it should feel when the earlier steps are done well.

Best Practices and Common Pitfalls

• ✅ Reconcile every account, every month, ideally soon after the statement closes.
• ✅ Tick items in statement order so nothing is skipped.
• ✅ Compare item counts as well as totals. A matching total can hide two offsetting errors.
• ✅ Save the statement PDF in the client's folder with the reconciliation report.
• ⚠️ Never use the online "current balance" as the ending balance.
• ⚠️ Don't use "Mark all" to tick everything and then untick the exceptions. It hides items.
• ⚠️ Don't skip reconciling because "the feed is connected." A connected feed proves nothing about accuracy.

Tool Translation: In Xero, reconciliation happens continuously by matching each bank statement line, and you compare the statement balance to the reconciled balance on the Bank Reconciliation Summary. There is no separate "start reconciling" step.

Sheets companion: A simple worksheet: Beginning balance + Deposits − Payments = Expected ending balance, compared to the statement.

Lesson 4.2: Credit Card Reconciliation

Learning Objectives

• Explain how credit card reconciliation differs from a bank reconciliation.
• Handle finance charges, fees, refunds, and payments.
• Complete a credit card reconciliation in QBO.

Content and Theory

A credit card is a liability. The balance is what the business owes. This flips the direction of the numbers compared with a bank account:

• Charges (purchases) increase what is owed.
• Payments and credits (including refunds) decrease what is owed.

The statement's ending balance is the amount owed at the statement closing date.

Items that often appear on card statements but not in the books:

• Finance charges (interest): an expense (for example, Interest Expense or Credit Card Interest).
• Annual fees and late fees: expenses.
• Refunds and returns: credits that reduce the card balance and the original expense.
• Rewards or cash back: usually income or a reduction of expense. Ask the tax preparer.

Reminder from Module 3: Paying the card from checking is a transfer, not an expense. In QBO the payment appears in both registers, and on the card's reconciliation it is ticked as a payment.

Step-by-Step Walkthrough

1. Gather the credit card statement. Note the previous balance, payments and credits, new charges, finance charges, ending balance, and closing date.
2. Make sure all card transactions for the period are entered or accepted from the card's feed (Module 3).
3. Go to Accounting, then Reconcile and choose the credit card account.
4. Enter the statement ending date and ending balance (the amount owed).
5. If the statement includes interest or finance charges, enter the finance charge amount, date, and expense account in the fields provided (or add it as an expense transaction on the card before you begin).
6. Confirm the beginning balance matches the previous balance on the statement.
7. Click Start reconciling and tick Payments and credits and Charges and cash advances against the statement.
8. When the Difference is $0.00, click Finish now and save the report.

Real-World Example

Bright Path's Business Visa (…8821), September statement:

• Previous balance owed: $700.00
• Payment received Sept 8: −$350.00
• New charges: Sunset Cleaning Supply $88.50, Shell Oil $41.30, Canva $12.99, Google Ads $60.00, Office Depot $37.25. Total $240.04.
• Finance charge Sept 30: $14.72
• Ending balance owed: $604.76

Solution breakdown:

1. Check the math: $700.00 − $350.00 + $240.04 + $14.72 = $604.76.
2. The $350.00 payment was already recorded as a transfer from checking (Module 3, line 6), so tick it in the card's Payments and credits.
3. Tick the five charges under Charges and cash advances.
4. The $14.72 finance charge is not in QBO yet. Enter it as a charge on the card, categorized to Interest Expense (or use the finance charge field at the start).
5. The Difference is $0.00. Finish now.

Without the finance charge, the reconciliation would have been off by exactly $14.72, which is a strong clue that a fee or interest item is missing.

Best Practices and Common Pitfalls

• ✅ Reconcile cards to the statement closing date, not the calendar month-end. They often differ.
• ✅ Look for finance charges, fees, and refunds first when the difference is small.
• ✅ Make sure the card payment from checking is recorded as a transfer and not an expense.
• ⚠️ Don't confuse "statement balance" with "current balance" or "minimum payment due."
• ⚠️ Don't reverse the signs. Charges increase the balance, and payments decrease it.
• ⚠️ Watch for personal charges on a business card. They are owner draws (Lesson 3.6), so ask the client.

Tool Translation: In Xero, a credit card is a bank-type account, and you reconcile its statement lines the same way as a bank account.

Sheets companion: A credit card worksheet: Previous balance − Payments + Charges + Fees/interest = Expected ending balance.

Lesson 4.3: Beginning Balances

Learning Objectives

• Explain why the beginning balance must equal the statement.
• Set up an opening balance correctly for a new client.
• Diagnose and fix a beginning balance that doesn't agree.
• Review a client's prior reconciliations before you trust them.

Content and Theory

Every reconciliation starts from the previous one. QBO's beginning balance is the ending balance of the last reconciliation. If that number doesn't equal the beginning balance on the new statement, something before this month is wrong, and no amount of work on this month will fix it.

The first reconciliation for a new client is special. There is no previous reconciliation, so the beginning balance comes from the opening balance entered when the account was set up (Lesson 1.5). It should equal the ending balance on the last statement before the books start, dated the last day of that statement period.

Common reasons a beginning balance is wrong:

• The opening balance was entered with the wrong amount or the wrong date.
• Transactions dated before the start date were added, or transactions were deleted.
• The client changed, deleted, or added transactions in an already-reconciled period.
• A previous reconciliation was ended with a forced adjustment.
• The feed start date overlapped with earlier manual entries (Lesson 1.5).

Opening Balance Equity: When you enter an account's opening balance, QBO usually balances the entry to a temporary account called Opening Balance Equity (Lesson 1.4). Once the opening balances are properly replaced by real transactions or reviewed with the tax preparer, that account should return to $0.

Prior reconciliations: If the client (or a previous bookkeeper) reconciled before, don't assume it was done right. Review the history before you build on it.

Step-by-Step Walkthrough

Set up an opening balance for a new client

1. Get the last statement before your start date and note its ending balance and closing date.
2. Choose the start date as the day after that closing date.
3. Enter the account's opening balance equal to that ending balance, dated the closing date.
4. Start reconciling the first month and confirm the beginning balance matches the statement.

Diagnose a beginning balance that doesn't agree

1. Write down QBO's beginning balance, the statement's beginning balance, and the difference.
2. Open the account register and look at the very first entries and their dates.
3. Run the Reconciliation Discrepancy report (Reports, then search for it) to see whether any previously reconciled transaction was changed or deleted.
4. Open the reconciliation history for the account and review the last few reconciliations. Look for unusual differences or adjustment entries.
5. Correct the cause (for example, the opening balance amount or a changed transaction), and re-check the beginning balance.

Real-World Example

Dana's August statement ended at $4,200.00, but when you start reconciling September, QBO's beginning balance shows $3,950.00.

Solution breakdown:

• The difference is $250.00. The problem is before September, so don't touch September's transactions.
• Look at the account's opening balance entry. It shows $3,950.00 dated August 31, but the last statement's ending balance was $4,200.00. It was entered wrong.
• Correct the opening balance to $4,200.00.
• Re-open the reconciliation. The beginning balance now agrees with the statement.
• Check that Opening Balance Equity doesn't carry a leftover balance.

If the opening balance had been right and the difference remained, the Reconciliation Discrepancy report would be the next stop, to see whether someone changed a reconciled transaction.

Best Practices and Common Pitfalls

• ✅ Always compare the beginning balance to the statement before ticking a single transaction.
• ✅ Choose a start date you can fully support with statements. A shorter, correct history beats a longer, uncertain one.
• ✅ Review prior reconciliations before you build on them, and tell the client about problems you find.
• ⚠️ Don't fix a beginning balance problem by adding an adjustment in the current month. It hides the real cause.
• ⚠️ Don't undo old reconciliations casually. Get client approval and understand what will be affected.
• ⚠️ Watch out for clients who edit old transactions. Recommend setting a closing date (Module 5) to protect completed periods.

Tool Translation: In Xero, opening balances are entered through conversion balances, and the reconciled balance report shows what the bank should equal.

Sheets companion: An "Opening Balances" tab with each account, the last statement's closing date, and its ending balance, signed off by the client.

Lesson 4.4: Finding Discrepancies

Learning Objectives

• Use the size of the difference to narrow down likely causes.
• Apply a systematic search process.
• Split a difference into its separate causes.

Content and Theory

When the Difference isn't $0.00, don't panic and don't guess. The difference itself is a clue. Experienced bookkeepers read it like a detective.

Clues in the size of the difference:

• Divisible by 9 (for example, $9.00, $18.00, $27.00, $90.00): likely a transposition (54.90 typed as 45.90) or a slide (a misplaced decimal).
• Exactly equals one transaction: a transaction is missing, duplicated, or was ticked when it shouldn't have been.
• Exactly twice one transaction: a deposit was entered as a payment (or the reverse), so the sign is wrong.
• Small round amounts (a few dollars): a bank fee, interest, or rounding item is missing.
• Large round amounts: a whole deposit or payment is missing, in the wrong period, or in the wrong account.

Multiple problems can hide together. A $24.00 difference could be one $24.00 error, or a $9.00 and a $15.00 error. Look for combinations.

The systematic search (in this order, from simple to detailed):

1. Re-check your inputs: statement ending balance, ending date, and beginning balance. A mistyped ending balance causes many "mystery" differences.
2. Check counts: the number of deposits and payments ticked versus the statement.
3. Read the statement line by line against the ticked list. Compare each amount, not just each description.
4. Look for statement items with no match in QBO: fees, interest, transfers, and anything in Excluded on the Banking page.
5. Look for QBO items that aren't on the statement: these are either legitimate timing items (outstanding checks, deposits in transit) or errors (duplicates, wrong dates, wrong account).
6. Check for changed or deleted previously reconciled transactions using the Reconciliation Discrepancy report.
7. Check the dates: a transaction dated in the wrong month will look "missing" or "extra."

Step-by-Step Walkthrough

1. Note the Difference on the reconcile screen. Write it down.
2. Write down the possible causes suggested by the size (divisible by 9? equal to an amount? small and round?).
3. Open the Reconciliation Discrepancy Log template and record the difference.
4. Work through the systematic search above, and note each finding and the effect it has on the difference.
5. Fix one problem at a time, and re-check the Difference after each fix.
6. Continue until the Difference is $0.00 and you can explain every item that is still uncleared.

Real-World Example

Bright Path, October. Statement (…4417): Beginning balance $5,602.15, ending balance $7,109.46. You tick everything that appears on the statement, and the reconciliation shows a Difference of $24.00 (QBO's cleared balance is $7,133.46).

Solution breakdown:

1. Inputs are right: the beginning balance ($5,602.15) agrees with the September statement's ending balance.
2. $24.00 is not one obvious transaction. Try combinations. $9.00 is divisible by 9, and $24.00 − $9.00 = $15.00, which equals the monthly service fee.
3. Compare amounts: the statement shows Shell Oil $54.90, but QBO has $45.90. A transposed entry, off by $9.00.
4. Check the Banking page's Excluded tab: the $15.00 monthly service fee was excluded, so it never reached the books.
5. QBO was too high by $9.00 (expense too small) plus $15.00 (expense missing) = $24.00. Both explained.
6. Two more items are left unticked in QBO: check #1112 for $200.00 (dated Oct 28, not yet cashed) and a second Facebook Ads charge of $75.00 (dated Oct 13). The check is a legitimate outstanding item. The second Facebook Ads entry is a duplicate of the Oct 12 charge (once from the feed, once entered by hand) and doesn't affect the Difference, but it makes expenses too high.

Notice the trap: the duplicate looks like an "outstanding" item because it is unticked. This is why you explain every uncleared item, not only get the Difference to zero.

Best Practices and Common Pitfalls

• ✅ Fix causes, not symptoms. Every correction should trace to a real transaction.
• ✅ Work on one issue at a time and re-check the Difference after each change.
• ✅ Explain every uncleared item at the end. Each one is either a timing item or an error.
• ⚠️ Don't assume a single cause. Several small errors often add up.
• ⚠️ Don't tick a transaction just because the description matches. Compare the amount.
• ⚠️ Don't edit transactions on the reconcile screen without noting what you changed and why.

Tool Translation: In Xero, run the Bank Reconciliation Summary and compare it to the statement balance. Unreconciled statement lines and unreconciled book items are listed separately.

Sheets companion: The Reconciliation Discrepancy Log: date found, account, statement amount, QBO amount, difference, cause, fix applied, and fixed by.

Lesson 4.5: Troubleshooting

Learning Objectives

• Recognize the most common reconciliation problems and their fixes.
• Know what you must never do to force a reconciliation.
• Handle stubborn or old discrepancies responsibly.

Content and Theory

Most reconciliation problems come from a short list of causes. Knowing them makes you fast.

Common problems and fixes:

• Duplicate transactions: the same item entered once by hand and once from the feed. Fix: delete the duplicate (or undo the extra add), and match instead of add in future.
• Excluded feed items: a real bank transaction was excluded. Fix: find it in the Excluded tab, restore it, and process it properly.
• Transposed or mistyped amounts: Fix: correct the amount to match the statement.
• Deposit entered as a payment (or reverse): the difference is twice the amount. Fix: correct the transaction type or sign.
• Payments stuck in Undeposited Funds: customer payments recorded but never grouped into a bank deposit, so nothing can be ticked against the statement deposit. Fix: create a Bank Deposit that equals the statement deposit (Lesson 2.3).
• Transaction in the wrong account: for example, a card charge entered in checking. Fix: move it to the correct account.
• Wrong date or period: Fix: correct the date so it falls in the period the bank recorded it.
• Missing fees or interest: Fix: add them, with proper categories.
• Changed or deleted transactions in a reconciled period: Fix: use the Reconciliation Discrepancy report to find them and correct them.
• Voided or stale checks: an old check that will never be cashed. Fix: confirm with the client, then void it properly and document why.
• Bank error: rare, but real. Fix: document the amount and contact the bank. Do not change the books to match a bank mistake.

What you must never do:

• Never click "Finish now" with a difference and let QBO post an adjustment. QBO can add a Reconciliation Discrepancies entry to force the numbers to agree. This hides errors and makes the books wrong. If it ever appears, it is a red flag from earlier work.
• Never create a "plug" entry to a random account to make the difference go away.
• Never delete a transaction just because it's causing trouble. Find out why it exists first.
• Never change the statement ending balance to make it work.

If you can't find it:

1. Take a break and come back to it with fresh eyes. Many differences are found on the second look.
2. Re-check the statement itself (page totals, a missing page).
3. Use the discrepancy log to show what you've already ruled out.
4. If the difference is old, large, or comes from before you started, tell the client. They may need to involve their tax preparer.

Step-by-Step Walkthrough: Cleaning Up October

Continue the October example from Lesson 4.4.

1. Correct the Shell Oil amount from $45.90 to $54.90. The Difference drops from $24.00 to $15.00.
2. Restore the excluded bank fee. Go to Banking, open the Excluded tab, find the $15.00 MONTHLY SERVICE FEE, and restore it. Then categorize it to Bank Charges.
3. Tick the $15.00 fee on the reconcile screen. The Difference is now $0.00.
4. Delete the duplicate Facebook Ads $75.00 dated Oct 13 (keep the one matched to the bank feed on Oct 12). Note it in the log.
5. Leave check #1112 unticked. It is a legitimate outstanding check.
6. Click Finish now and save the Reconciliation Report.

Real-World Example

Dana asks: "My bank reconciliation is off by $2,000. Is my money missing?"

Solution breakdown:

• Not necessarily. A $2,000 difference is a large, round number, so suspect a whole transaction. Check whether Dana's $2,000 owner contribution is in the books, in the right account, and dated in the right month.
• Check Undeposited Funds for payments that were recorded but never deposited.
• Check Excluded transactions and the Reconciliation Discrepancy report.
• If it's twice a transaction, look for a wrong sign. If it's one transaction, look for missing or duplicated items.
• Report back to Dana with what you found, what you fixed, and what remains, plus the evidence.

Module 7 revisits this as a full client scenario.

Best Practices and Common Pitfalls

• ✅ Keep a running list of what you've checked so you don't repeat work.
• ✅ Fix the root cause so it doesn't come back next month (for example, teach the client to stop entering feed items by hand).
• ✅ Communicate: tell the client what was wrong and what changed.
• ⚠️ Don't hide a difficult reconciliation. Escalate when needed.
• ⚠️ Don't reconcile several months in one go without checking each month's beginning balance.

Tool Translation: In Xero, use the Bank Reconciliation Summary and the Account Transactions report to find unreconciled or unexplained items.

Sheets companion: A "Troubleshooting Checklist" tab with the list above so you can tick off what you've ruled out.

Lesson 4.6: Reconciliation Reports

Learning Objectives

• Read the Reconciliation Report (Summary and Detail).
• Save and file reconciliation evidence properly.
• Use reconciliation history and the Discrepancy report for review.
• Explain a reconciliation to a non-accountant client.

Content and Theory

Finishing a reconciliation produces a Reconciliation Report. It is the documented proof that the books and the statement agree, and it's part of what makes your work professional.

What the report contains:

• Summary:
  • Statement beginning balance
  • Checks and payments cleared, and deposits and other credits cleared
  • Statement ending balance
  • Register balance as of the statement date
  • Any uncleared checks and deposits (timing items) and the register balance after them
• Detail: every cleared item and every uncleared item, listed one by one.

Related reports you should know:

• Reconciliation history: a list of past reconciliations for an account, with the ability to view each report.
• Reconciliation Discrepancy report: shows transactions changed or deleted after they were reconciled. Very useful for reviewing a client file or catching tampering and accidental edits.

Filing: Save each Reconciliation Report as a PDF alongside the statement PDF, in a consistent place and with a consistent name, such as BrightPath_Checking4417_Recon_2026-09.pdf. This makes month-end packages (Module 5) and year-end tax preparation much easier.

Explaining it to a client: Keep it simple. "Your bank statement and QuickBooks agree as of September 30. The only difference is one check that hasn't been cashed yet."

Step-by-Step Walkthrough

1. After clicking Finish now, choose Display reconciliation report.
2. Confirm the statement ending balance and the cleared balance agree.
3. Read the uncleared items section. Each item should have an explanation (outstanding check, deposit in transit).
4. Confirm the register balance makes sense: statement ending balance, minus outstanding payments, plus deposits in transit.
5. Choose Print or Download PDF for both the Summary and Detail versions.
6. Save them in the client folder with the statement.
7. To find an older report, go to Reconcile, then History by account, and open the one you need.
8. Run the Reconciliation Discrepancy report after each reconciliation and at the start of any new client engagement.

Real-World Example

Bright Path, October, after the corrections in Lesson 4.5.

Solution breakdown:

• Statement beginning balance: $5,602.15
• Deposits and credits cleared: $2,420.91
• Checks and payments cleared: $913.60
• Statement ending balance: $7,109.46 (equal to the cleared balance, so the Difference is $0.00)
• Uncleared: check #1112, $200.00
• Register balance: $6,909.46 ($7,109.46 − $200.00)

Your note to Dana: "October's checking account reconciles to the bank statement. Two errors were fixed (a transposed gas entry and a missing bank fee), and one duplicate ad charge was removed. One check for $200.00 is still outstanding."

Best Practices and Common Pitfalls

• ✅ Always save the report as evidence. If a question arises later, you can prove what was done.
• ✅ Review uncleared items every month. An old outstanding item may need attention.
• ✅ Run the Discrepancy report regularly.
• ⚠️ A finished reconciliation is only as good as its process. A $0.00 difference reached with a plug entry is not a reconciliation.
• ⚠️ Don't send a client reports that contain unexplained uncleared items.
• ⚠️ Old uncleared checks (several months) should be reviewed with the client. They may be void or stale.

Tool Translation: In Xero, use the Bank Reconciliation Summary and Reconciliation Report to show reconciled balance and unreconciled items.

Sheets companion: A "Reconciliation Tracker" with one row per account per month: statement date, ending balance, difference, date completed, and where the PDF is saved.

Module 4 Knowledge Check

Answer each question. Your answers are checked only when you click Check answers — nothing is revealed until then.

Module 4 Practical Exercise: Reconcile Bright Path's Books

Scenario: Dana sends you her September and October statements and says: "Please make sure my QuickBooks agrees with the bank and my credit card. If something's off, tell me what happened." Work in the same practice file you used in Modules 1 through 3.

Part A: Reconcile September Checking (…4417)

Setup: Make sure the account's opening balance is $4,200.00, dated August 31 (Lesson 4.3). Make sure all 20 checking lines from Module 3's exercise have been processed.

September statement summary:

• Beginning balance: $4,200.00
• Deposits and credits: 5 items totaling $3,840.87
• Checks and withdrawals: 15 items totaling $2,438.72
• Ending balance: $5,602.15 (closing date September 30)

Tasks:

1. Verify the beginning balance in QBO agrees with the statement.
2. Reconcile the account. The Difference must be $0.00 without any adjustment.
3. If it isn't, use the method from Lesson 4.4 to find the cause, and record it in a Reconciliation Discrepancy Log.
4. Save the Reconciliation Report.

Part B: Reconcile September Credit Card (Business Visa …8821)

Setup: The card's opening balance owed is $700.00 as of August 31. Enter or import the card transactions below, and categorize them using Lesson 3.4.

September Visa statement:

• Previous balance: $700.00
• Sep 7, SUNSET CLEANING SUPPLY, $88.50 (Cleaning Supplies)
• Sep 8, PAYMENT THANK YOU, −$350.00 (already recorded as the transfer from checking)
• Sep 11, SHELL OIL, $41.30 (Vehicle: Fuel)
• Sep 14, CANVA, $12.99 (Software and Subscriptions)
• Sep 20, GOOGLE ADS, $60.00 (Advertising and Marketing)
• Sep 24, OFFICE DEPOT, $37.25 (Office Supplies)
• Sep 30, FINANCE CHARGE, $14.72 (Interest Expense)
• Ending balance owed: $604.76

Tasks:

1. Verify the math on the statement ($700.00 − $350.00 + $240.04 + $14.72).
2. Reconcile the credit card so the Difference is $0.00.
3. Confirm the $350.00 payment appears in both registers as a transfer, and not as an expense.

Part C: The Broken October Reconciliation

This part is a detective exercise. Use the two lists below (you can work on paper or in a spreadsheet, or enter the QBO list into your practice file).

October bank statement (…4417): Beginning balance $5,602.15. Ending balance $7,109.46.

• Oct 3, DEPOSIT, +$1,800.00
• Oct 5, SUNSET CLEANING SUPPLY, −$190.55
• Oct 7, SHELL OIL 5563, −$54.90
• Oct 8, STATE FARM INS, −$96.00
• Oct 10, VERIZON WIRELESS, −$82.15
• Oct 12, FACEBK ADS, −$75.00
• Oct 15, DEPOSIT, +$620.00
• Oct 18, MONTHLY SERVICE FEE, −$15.00
• Oct 22, ONLINE PMT TO VISA …8821, −$400.00
• Oct 31, INTEREST PAID, +$0.91

What QBO shows for October in the checking register:

• Oct 3, Deposit, +$1,800.00
• Oct 5, Sunset Cleaning Supply, −$190.55
• Oct 7, Shell Oil, −$45.90
• Oct 8, State Farm, −$96.00
• Oct 10, Verizon, −$82.15
• Oct 12, Facebook Ads, −$75.00
• Oct 13, Facebook Ads, −$75.00
• Oct 15, Deposit, +$620.00
• Oct 22, Transfer to Visa, −$400.00
• Oct 28, Check #1112 (J. Cruz, contract help), −$200.00
• Oct 31, Interest, +$0.91
• The Oct 18 $15.00 service fee is sitting in the Excluded tab of the bank feed.

Tasks:

1. Calculate what QBO's Difference will be once you tick every statement item that has a counterpart in QBO.
2. Break the Difference into its separate causes, using the clues from Lesson 4.4.
3. Identify any item in QBO that isn't on the statement, and state whether it is a legitimate timing item or an error.
4. List the exact corrections, in order, and the Difference after each.
5. State the final register balance after the corrections.
6. Complete a Reconciliation Discrepancy Log entry for each issue.

Part D: Client Summary

Write a short note to Dana (5 to 8 sentences) that explains, in plain language, that September and October now agree with the bank, what errors were found and fixed, what is still outstanding, and one habit that would prevent the problems from recurring.

Deliverables

Reconciliation Reports for September checking and the September credit card; your completed Discrepancy Log for October; your answers to Part C; and the note to Dana.

Self-Assessment Rubric

• Setup and beginning balances: Excellent means the beginning balance was verified against the statement before ticking anything. Needs work means the beginning balance was never checked.
• Reconciliation accuracy: Excellent means a $0.00 difference reached with no adjustment entry. Needs work means a forced adjustment or a plug entry.
• Credit card handling: Excellent means the finance charge was recorded as interest expense and the payment is a transfer. Needs work means the payment was treated as an expense.
• Discrepancy detection: Excellent means all causes found with reasoning tied to the size of the difference, and the duplicate spotted even though it doesn't affect the Difference. Needs work means only the Difference was chased.
• Documentation and communication: Excellent means reports saved, log complete, and a clear plain-language note. Needs work means no evidence kept or a technical, unclear note.

Stretch Challenge

Dana forgets and edits the amount of a September transaction after you reconciled it. Which report would show you, and what would you check first on the next reconciliation? Write a two-sentence explanation you could give Dana about why closing the period after each month-end (Module 5) helps.

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Check Your Work

Finished the exercise? Compare your work against the answers below.