Clearing Account Reconciliations

There are accounts in the General Ledger in which amounts will be posted, then the offsetting amount will be posted to clear the original amount.  These are commonly referred to as Clearing Accounts.  Some examples of accounts that function as clearing accounts that we recommend that you reconcile regularly include:

Undeposited Funds: Money that is received is posted to this account.  The amount is cleared when posted to a deposit.

Wholegoods Inventory: The cost of the unit will be posted.  The cost will be removed at the time of sale.

Wholegoods Floor Plan: The liability is posted at the time of purchase.  The payoff is posted after the sale.

Contracts in Transit: The contract is posted at the time of sale.  The receivable is cleared at the time of receipt of funds or contract settlement.

Reconciling a clearing account is a different process than a standard reconciliation in that the Beginning Balance and Ending Balance are both always set to $0.00. During the reconciliation, you are clearing specific transactions that have completed their life cycle. Example: after selling a wholegood, you are able to clear the transactions in the Wholegoods Inventory account that are referenced to the sold wholegood. The purpose of the reconciliation is to discover any errors in the entries that result in a balance that does not equal $0.00.  

To begin the Reconciliation, navigate to:

Banking > New > Reconciliation

Click on the ellipse (3 dots) in the Account field to select the G/L account to be reconciled.

Once the account is populated, all unreconciled transactions will populate in the grid.  You have the option to update the ending date for the reconciliation.  The Beginning Balance and Ending Balance should be left at $0.00.

In our example, we will be reconciling a Wholegoods Inventory account.  This is a similar process to reconciling Floor Plan and Contracts in Transit where the entries are referenced and can be reviewed by each reference (Wholegood or Supplier) posted.

There are a couple of methods to reconcile cleared transactions in a referenced account. Most reconciliations will include a combination of the two methods.

1. Group Transactions by the Reference Field.
2. Maintain a list of References that have been cleared and search for each individually.

Grouping and Sorting Transactions by the Reference Field

To group transactions by the reference field, locate the Reference column in the grid, click and hold on the header box to drag the box to the grouping area.  

Once grouped, right-click on the grouping box and choose Full Expand.

Once you have the groupings, you will see the subtotals by each reference.  You can sort by this summary by right clicking on the grouping box a second time, highlight Sort by Summary, and choose the Sum by 'Amount' - Sort Ascending. This will sort the groups from the smallest subtotal to the largest subtotal.  

You are looking for references where the Subtotal is $0.00.  These will be cleared amounts that can be selected for reconciliation. If you have a list of Sold units to be reconciled, you can verify the list of selected units against the list of Sold units to ensure that all are being included.

If the Reference description changes during the life of the unit, Sorting by the Reference Field is another method for finding offsetting transactions.  In the ungrouped grid, click on the Reference column header to sort the list.  You will see each System ID will sort correctly even if the description has changed.

Searching Individual References for Reconciliation

Using the Find Panel Search box to verify each reference to be cleared is another method for finding and clearing transactions.  This is helpful in finding posts by unit when the Reference description has changed. By using the System ID of the reference with the parenthesis is the most accurate method of finding transactions tied to a specific unit.

The find panel can be found at the top right of the Grid in the Grouping area.  It may look like a magnifying glass or it may be expanded to show the full Find Panel.  To open the full find panel, click on the magnifying glass.

To search the unit for reconciliation, enter the System ID of the unit in the find panel.  For a more exact search, you can include the parenthesis in the search box. Both methods will return the unit information, but the method with parenthesis will also filter additional units with similar data.

Once filtered to the specific unit, you verify the subtotal of entries for the unit equals $0.00.  If the Subtotal clears to $0.00, select the entries for reconciliation on the left.  You can then move to the next Sold unit on the list to search and clear.

After selecting all transactions to be included in the reconciliation, the amounts that are calculated in the header information should all still subtotal to $0.00.  Click on Save Finished Reconciliation to finalize and implement the Reconciliation. In my example below, I filtered the grid to only show line items selected to be included in the Reconciliation.  This also allows me to verify the Amount of the selected items totals to $0.00.

Once you have completed your clearing reconciliation, you can verified the open entries that contain balances directly on the G/L.  Open the chart of accounts by navigating to:

Company > Find > Chart of Accounts Grid

Double click on the account that was Reconciled to open the report. Set the Date Range to ALL.  Select the box for Retrieve Uncreconciled Transactions Only and click Fetch.

The resulting report will display only unreconciled transactions that are making up the balance in the account. You have the same filtering and grouping options in this report that you have on the Reconciliation form.