DBD: AR - Reconcile At Month End
DBD: Accounts Receivable - Reconcile AR At Month End
🔵 Overview Make sure that you have updated all Invoicing and Cash Receipts Batches that you may have in process, and update your General Ledger Detail Transaction Register.
Step 1: Compare the AR Trial Balance to the General Ledger
Print out the Accounts Receivable Trial Balance for the period. Then print a General Ledger Report for your AR Account for the same period. Then compare the Ending Balance Total from the AR Trial Balance with the Ending Balance on your General Ledger report. These two numbers should equal.
If they do, your reconciliation is complete and you can close your month by selecting the Period End Update from the AR Period End Processing Menu.
If You Are Not in Balance: Identify the Cause
Compare the Opening Balance of your Accounts Receivable Trial Balance with the Beginning Balance on your General Ledger. If they balance, then your problem is in the current month. If your beginning balance is off be the same dollar value as the Ending Balance, then this is a carry over from a prior month.
Prior Month
You should be balancing each month. If this situation occurs, then look in a prior month for a journal entry that may have been made. Compare your Current General Ledger Report for the current period, does it equal the one you printed last month that you filed with your reconciliation.
Compare the Beginning Balance on the Current period AR Trial Balance with the Beginning Balance from the prior month, do they equal? If not, then you can compare the two reports to identify the customer and invoice number that does not carry the same balance between the two reports.
Current Month
Take a look at your General Ledger, do you see any JE-Journal Entries that may have been made in this period. If the answer is Yes, this is a probable cause. If not, proceed to the next step.
Use your General Ledger to provide you with totals for the different types of source journals using the 'Source Journal:' field on your report selections — here you can enter either SJ-Sales Journal or CR-Cash Receipts and the system will provide you with a report showing only these totals for you to use in your reconciliation. Then compare the results to the appropriate report columns on your AR Trial Balance report.
💡 Note: If this is on the Cash Receipts side, you may also wish to review the General Ledger to make certain that you have not written off an AR invoice to your AR account — this will show with a CR as the source journal and give you the customer name information.
Once you have identified which one of these areas does not balance, you have narrowed your search.
Final Step: Verify Source Journals
Collect your Source Journals that do not balance with the General Ledger and use your General Ledger report as a check list and verify the total amount on the journal posted correctly as the same total to the General Ledger.
Frequently Asked Questions
Q: What's the first step in reconciling AR at month end?
A: Print the AR Trial Balance and a General Ledger Report for your AR Account for the same period, and compare the Ending Balance Total on each. If they match, your reconciliation is complete and you can close the month via Period End Update.
Q: My ending balances don't match — where do I start?
A: Compare the Opening Balance on the AR Trial Balance to the Beginning Balance on the General Ledger. If those match, the problem is in the current month. If the beginning balance is off by the same amount as the ending balance discrepancy, it's a carryover from a prior month.
Q: How do I investigate a prior-month carryover issue?
A: Look in the prior month for a journal entry that may have been made, and compare the Beginning Balance on the current period's AR Trial Balance to the Beginning Balance from the prior month. If they don't match, compare the two reports to find the specific customer and invoice number causing the difference.
Q: How do I investigate a current-month issue?
A: Check the General Ledger for any JE-Journal Entries made in the period. If none, use the Source Journal field on your General Ledger report (SJ-Sales Journal or CR-Cash Receipts) to get totals and compare them to the matching columns on your AR Trial Balance.
Q: What should I check if the discrepancy is on the Cash Receipts side?
A: Review the General Ledger to make sure an AR invoice wasn't written off directly to the AR account — this shows up with CR as the source journal and includes the customer name.
Tags: accounts-receivable, reconciliation, month-end, trial-balance, general-ledger, DB-distributor