yo yo yo what's going on you know who it
is
CPH strength strongest licensed CPA in
the state of Florida what do you do over
your CPA strength I teach the world
basic accounting building blocks my
building blocks I building blocks my
building blocks if this happens to be
your first time we haven't been
binge-watching it's not 4:00 a.m. you
should
you've been binge watching it's like a
day and a half you got a test in two
hours if that's not you if that is you
good luck if it's not you and you want
that and you need that to be you like in
another 24 hours go over here to the car
do the best accounting playlist on
YouTube in the world I don't want to
limit myself in the world all your
dreams will come true just hit that that
is my accounting for beginners playlist
that's like classic series and right now
you're another video of the classic
series this is installment number 59 5
and then you go put a little and add a 9
to it that's it again 59 wine we dine me
50 90 me not 79 sorry this one is bank
reconciliation example in our previous
video we did I showed I showed you I
tried to show you why that you might
have a difference between your bank
statement and your internal documents
how there would be a difference most
likely by an out stand by a check that
you wrote to somebody that they did not
cash by the time that bank statement was
issued which is what we're going to call
an outstanding check it's it's out there
he's out there algea
like I'm out here in making these
accounting videos boy a shout out to a
good night sleep shout out to sleep man
underrated under raid in the game shout
out to good night's sleep I haven't had
one of those a couple months it seems
like shout out to sleep so I outstanding
outstanding check is is a check that's
out there but I think in the profession
the professionals I think they call that
an outstanding check go further just
like I'm just like most things in
accounting where if you write the whole
word out that's why I wanted to prove it
to write the whole word out you can
don't abbreviate it when you're beginner
you write the whole word out and if you
just break it down it makes sense so
we're going to do in a little example
we've got you already know why it's a
possibility that and it happens quite
often that when your bank statement
comes out the cash balance according to
the bank statement is different than the
cash according to your company wherever
you know whatever your ears and on your
internal documents I kind of guys this
example a little bit of my book and I
like how they they say the book says you
know I'm cash according to company not
you know what this is like you don't
want to get bogged down with digital is
it a ledger is a journal
is it the book it's just according to
company like that because because we're
the point we're trying to illustrate is
that there's a difference because of
maybe an outstanding check or deposit
and transit you get your bank statement
all right and the ending the cash
balance is $10,000 all right that's fine
you know that's how much the bank has
and then you look in your document your
internal company you meant and it
says we're just going to say I always
like to use 1231 you're looking at your
bank statement for the ending balances
at 12:31 16 a $10,000 in there you're
like a 10 a 10 KS I got 10 racks boy
racks on racks cash according to company
at 12:31 16 nine thousand fifteen right
what maybe maybe your pick I don't know
maybe you're paying accountant that
didn't reconcile to your like what's the
difference you don't do nothing what's
going on why
a difference with only a couple smaller
numbers a couple of transactions so it's
somewhat easy I try to make it easy for
the brain to see it and I want you to
get the pattern you know what uses add
and subtract but I like to do these
smaller type examples that you might
they'll see in your head and get what
you add and subtract that way you can
extrapolate it and and do it by you know
millions of times so if you have you
notice a difference you look at your
bank statement 1231 $10,000 then you
look at your company documents and you
have nine thousand fifteen dollars so
here is a problem it needs a
reconciliation right you have two
different two differing opinions two
differing facts or whatever and they
need to reconcile you need to come
together as one and that's exactly what
we're going to do we're going to get an
adjusted balance from the bank statement
this is the bank statement up here this
is the bank up top and at the bottom is
the company so you're going to think up
here a bank statement down here is
company now they have to you have to get
you start off different we have to work
work our we have to work our way to an
adjusted balance that's what we have to
do that's what we're wrecking sell rates
are differing they're going to come
together and be the same and so that's
that's what that to the reconciling so
look it started ten thousand and nine
thousand fifteen and the adjusted
balance is adjusted violence that we
come up with for the bank is nine
thousand dollars the adjusted balance
that would come up for the company
it's also $9,000 how did you adjust it
let's do it let's adjust it let's start
off first with the bank statement so
this is what you're going to start with
you're just going to start with the cash
balance at a certain date in the bank
all right that's what you're going to
start with in the bank
similarly that's what you're going to
start with in your company documents so
now we have to adjust so you start with
$10,000 and you say then I think gosh
we've got a difference
they started ten thousand you're
starting at nine thousand so it's our
difference of a thousand nine hundred
eighty-five dollars right or what's the
difference here what could be the
difference what could be the difference
you guys think you're going to think
what could be the difference what would
have what would what happened well let's
just let's just look at my ternal let's
look at my internal documents because
here's worded let's look at my internal
documents versus the bank statement and
try to figure out what's different here
you would go into what wouldn't what
wouldn't the bank the bank statement
possibly know about a deposit in transit
meaning is like we went through before
check doesn't get cat no one cashes the
check you know
same thing you're on the other side
someone gives you me if someone gives
you a check so you have chippers that
you're going to put in your bank account
where you put it in your bank account
but it doesn't get cleared by the time
the bank statement comes out so you have
a deposit in transit so what would that
do when it does clear what would it do
what would a deposit in transit
due to your bank statement it would
increase it so that's why that's why
cash balance according to bank we're
going to increase the pus and transit
you happen to have $2,000 deposits in
transit all right what else would be a
difference as you're going through and
thinking what happened in my bank
account what happened in my business
this month that my bank account might
not know about deposits in transit yes
what about checks that I that's a check
that someone wrote me what about to
check that I wrote to people yes exactly
that's an outstanding check I surprised
the most common I would say what's
acting to do once my once the bank
statement my bank account statement
catches up with the checks when I
finally do catch the outstanding checks
it's going to lessen it's going to
reduce the money and might make it count
so we're going to subtract outstanding
checks and that happens to be three
thousand or three thousand dollars of
outstanding checks started with ten
thousand dollars according to bank you
act deposits and transit 2000 subtract
3000 outstanding checks to get nine
thousand dollars after adjusted balance
now the main the main thing is the
adjusted bank balance has to has to has
to has to have to have to equal the
company adjusted balance now it doesn't
return this the adjusted balance for the
bank's nine thousand your cash according
to companies nine thousand fifteen your
$15 off so now you kinda gotta switch
switch to hat somewhat because before
when you were when you were just when
you're adjusting the bank statement
balance you had to st. what happened in
my company documents I didn't that the
bank statement doesn't know about yet so
let's reverse it now we're adjusting the
company bank statements so
what would happen on the bank statement
that you don't know about that you know
what would happen on the bank statement
that you don't know about your company
documents until you see the bank
statement service charge a service
charge as a common one it happens a lot
think about it because you don't know
you were hoping you met the parameters
and didn't get a service charge but they
always come up with something different
so you always get hit for a service
charge for say $15 so you didn't know
that until now you're reconciling you're
making them come together so you're
looking at your bank statement you're
saying what do I what didn't I know in
my company documents oh the $15 service
fee that's already included in this
amount because well they did it they
know about it it's not included in this
amount because while you didn't know
about you were hoping you didn't get it
what you did when you're when you're
adjusting your company very correct view
subtractive service fee service we
happen to be fifteen dollars so now your
adjusted balance is nine thousand
dollars the big thing is the the
adjusted balance for your company has to
have to have to have to have to have
equal the adjusted balance for your bank
and there is a bank Breck example I hope
this was good now you're going to get a
whole bunch of different stuff
essentially if you're studying for an
exam you want to start with your a
certain date you want to start with your
what's the cash balance in your vendor
and your banks on your bank statement
what's the cat with the cash balance in
your company start with that if there's
the same great
typing move on if they're different why
are they different then you're going to
go after the bank statement you're going
to add deposits in transit you're going
to subtract those dating checks then
you're going to go to your company and
you're going to subtract service fees
now there can that was just in my
example in the in your problems and your
real-life examples or what have you
your going to have if you have a
difference between your bank statement
cash balance and your cash balance
according to company if they differ
you're going to add such you're going
you can add and subtract different
things to your bank statement and get an
adjusted balance as well as you might or
might not add or subtract things to your
company balance and get adjusted belts
for the company almost out of time thank
you very much let's think more do that's
an order bation just for me because I
always just overthink things so I you
just go go go go go peace