MB’s School of Beauty calls you because their beginning balance is off in their reconciliation window...

MB’s School of Beauty calls you because their beginning balance is off in their reconciliation window for their checking account. You log in and see that there are many transactions that were changed/deleted on the last couple of months' reconciliations. She likes to do as much she can on her own. Which of the following next steps would you take?

A. Enter a journal entry to Opening Balance Equity to compensate for the difference

B. Advise her to use the Undo button to undo the reconciliation and re-reconcile the account

C. Undo the previous months' reconciliations for her so that she can re-reconcile each month

D. Advise her to complete the reconciliation as normal, then use the auto-adjustment feature to balance the reconciliation

E. Re-enter the changed/deleted transactions and manually reconcile them in the register, then advise her to complete the current month’s reconciliation as usual

Expert Solution

1) Option A : NO

If you enter a journal entry to compensate for difference, it would be an adjusting event, which would again be carried to all years ahead. So, this is not a proper option.

2) Option B : NO

This feature of undo is not always available with the softwares. Example : Tally , once here entry is done you cannot undo it. But you have to find out the entry & delete it.

3) Option C : NO

Undo is not an option for such mistakes. You need to do all reconciliations carried by rectifications if any or start from scratch if data available.

4) Option D : NO

Auto adjust feature will not work to balance as again an human intervention shall be needed. She needs to be guided properly.

5) Option 5) : YES

Here, a proper step shall be adopted by making a register and re-entering all changed/deleted items manually. This will surely help us find what was the mistake that had occured & guide her properly. Whenever, maintaining books of accounts, make it a practice to maintain some register atleast which will require reconciliations so that at the year end, you be able to concentrate on other factors regarding financial statements.

ekkarill92 answered 1 year ago

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