Starting a new company file which will start from the new tax year (1st April).

The opening balances for bank accounts are taken from the bank statement at the last day of the month before the new tax year (31st March).

But what about bank transactions performed close to the end of the previous year which don't show on the bank statement?

How do I account for cheques which were issued in the previous year which have not yet cleared and therefore do not show on the bank statement at 31st March?

How do I account for deposits paid into the bank on the last day of the previous year which are not shown on the bank statement?

These deposit and withdrawal transactions will have already been recorded in the previous year's cash book. Any vat on the transactions concerned will have been accounted for. When they appear on the next bank statement I will be unable to reconcile the statement to transactions in the new year.

Should I go through the cash book and bank statement matching up cheques and deposits not listed on the statement and then adjust the opening bank balance entered into Solar Accounts by adding or deducting these amounts? If this is correct, how do I account for the cheques and deposits in Solar Accounts when they finally appear on a bank statement?

Hi Vic,

Unfortunately Solar Accounts doesn't handle this situation as easily as it should. Let's say the balance on your bank statement at the start of April was £1,000. Also assume that during March you deposited a cheque for £80 and wrote a cheque for £50, but these cheques did not clear until sometime during April.

In Solar Accounts you would set the opening Cheque Account balance to £1,030 and create three transactions dated on 1 April:
1. A General Transaction from the Cheque Account to the Balancing Account for £30
2. A General Transaction from the Balancing Account to the Cheque Account for £80
3. A General Transaction from the Cheque Account to the Balancing Account for £50

(Notice that the three transactions cancel each other out, so the net effect is to leave your account balances unchanged. Their only purpose is to allow different amounts to clear at different times in the bank reconciliation list.)

Now in the Bank Reconciliation list, tick the first General Transaction to mark it as 'cleared' - this will result in the Bank Balance column being £1,000 (which matches your bank statement). The other two transactions you reconcile in the usual way - that is, reorder them so they match your bank statement.

Regards,

Hi Mark,

Thanks for explanation. It's a good job I asked here, I was getting nowhere.

When asked the same question, our accountant answered "Accruals and Prepayments should be entered into the Opening Balances Contra account". Eh!.. What on earth does that mean! They may have well been speaking Klingon. I can't even find the opening balances contra account in Solar Accounts.

Assuming the accountants properly understood what I asked, your method is much easier to understand.

Hi Vic,

Hmmm...I have to admit I don't really understand your accountant's response either!

Cheers