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Getting Ahead

TIPS ON TAXES

TAX TIPS

Q I am tired of bouncing or nearly bouncing checks. I have no idea how other people manage their checkbooks! Can you please explain how I go about reconciling with the bank?

Q I am tired of bouncing or nearly bouncing checks. I have no idea how other people manage their checkbooks! Can you please explain how I go about reconciling with the bank? A Reconciling your checkbook balance to the bank statement may seem mysterious and difficult for those taking on this responsibility for the first time. Balancing your checkbook is simply reconciling the amount you believe you have in your account to the amount that the bank statement says you have. Obviously, you must enter all your transactions (deposits, checks, debit card and automatic payments) in your check register and keep a running balance. To begin, you will need your latest bank statement (which may include your canceled checks) and your checkbook register. Study your bank statement. Each bank prints them in a slightly different format, but they all should contain the following information: • The dates for which the statement is prepared, including the beginning and ending dates • Beginning and ending balances • A summary of the total deposits and withdrawals • The detail of your deposits, including deposit dates and amounts • The detail of your withdrawals, including check numbers, check amounts, bank charges, cash withdrawals and transfers, etc. The idea is to compare your checkbook register with the bank statement to be sure each entry is accurate and that the arithmetic is correct. To do this, you will need to "check" off all the items (deposits and withdrawals) in your check register that appear on the bank statement. You may need to enter legitimate receipts or charges (i.e., interest income, bank charges and fees, etc.) in your register. You will need to make a list and total all outstanding checks. These are checks that you have written, but have not been charged by the bank as of the ending date of the bank statement. You will also need to make a list of any outstanding deposits. These are deposits you made that have not been credited to your account as of the ending date of the bank statement. Once you have the above information, you are ready to reconcile your checkbook register balance to the bank statement balance. To balance, you need to subtract the outstanding checks and add the outstanding deposits to the ending bank statement balance. The resulting total should equal the balance of your checkbook register. Most bank statements provide a reconciliation format as described above to help guide you through this process. After a few months, you will become an expert at reconciling your checkbook and enjoy the satisfaction and peace of mind of knowing that you have an accurate balance. Please note that on occasion banks do make errors, or you could be the victim of identity or check theft. Failure to timely reconcile your bank accounts can cost you money! If you do discover a bank error, report it to the bank immediately and be sure to follow up the correction. In addition to reconciling your bank account, it is also a good idea to periodically review your account on line for any unusual charges or transactions. Most banks have user-friendly websites and will be happy to set you up with this service. Barry Dolowich is a certified public accountant in Monterey. He can be reached at 372-7200, P.O. Box 710, Monterey 93942-0710 or bdolowich@gmail.com.

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