Setting up MYOB - how to do initial bank reconciliation

At 06:01 PM 6/23/2005, (email deleted for wiki) wrote:
>Hi there, I am currently setting up a friends business in MYOB. His
>business is already existing and I am trying to reconcile his bank
>statement. The problem I am having is where do I get last months closing
>balance into MYOB, which is obviously this months opening balance, so that
>I can enter this months closing balance and reconcile activity this month.

When MYOB is set up, a starting balance is entered for each account. What
you want to get into MYOB is the starting balance of the account, being the
last reconciled balance — statement balance — from the last period before
the start date of MYOB. You also want to be in MYOB the uncleared items
outstanding as of the start date. When we did our setup, even though we
were starting as of Jan 1, 2001, we made entries into 2000, being the
outstanding checks and deposits from 2000. Then, when it was all correct,
we closed 2000. I actually wish we had left it open longer, because errors
were later found, and it would have been easier to correct them in 2000
than to correct them in 2001, which is more complicated.

What you *could* do is to enter the true balance of the account (i.e.,
statement balance plus or minus outstanding items) as the starting balance
in your account setup, even after your original setup. (Lists/Accounts/open
the account in question). I think you can change that balance at any time.

Then, with your first reconcilation, you would ignore any outstanding items
that cleared and otherwise reconcile in the ordinary way. As long as no
items remained outstanding, this would be a quick solution. And you would
continue to do this until all outstanding items were clear or void.

>Also there are a lot of cash purchases as we are getting ready for BAS I
>have posted these to a cash account is this the right way to go as it is
>showing that cash is in the negative.
>
>If anyone could help that would be great.

I use a Petty Cash account for cash purchases. The Petty Cash account is
essentially my pocket. When I spend cash, I debit the Petty Cash account.
And when I take cash, I credit it.

(At the end of the accounting period I zero out Petty Cash. If it has a
negative balance, I debit it to zero and credit it to Paid-in Capital. And
if it has a positive balance, I do the reverse, crediting it to zero and
debiting Draws. Those accounts are what I use when I invest money in the
business, or when I take money out; at the end of the period I transfer
amounts from one to the other so that the net balance is shown in the
account that is greater. These are General Journal entries.)

If there is a Cash drawer, then it is really just like any other checking
account, and you would reconcile it by counting what is actually there,
with the discrepancy being transferred to Cash (Over)/Short, which is an
expense account, normally, but it is reported as income if it has a credit
balance.