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Reconciling A/R to the general ledger

Adapted from the Macola® accounting technical note "A/R to G/L Reconciliation" (ARGLREC, revision 1, Progression 7.5).

The first thing to get right is which account you are reconciling. A site can use several A/R accounts, and the A/R account can be changed while a transaction is being entered — so a report that ignores the A/R account cannot balance to a single G/L account.

Use the right report

Use the A/R Reconciliation Report by Account/Customer number. It breaks the information out by A/R account number, because it reads the A/R Account field on each transaction in the open item file as well as the balances.

The A/R Aging report cannot be used to reconcile

The aging report reports everything without regard to which A/R account each transaction used. Since the A/R account can be changed during sales entry, the aging report is not reliable for reconciling to the general ledger.

Step 1: Run the A/R Reconciliation report

Decide the date range first, then run the report for exactly that range. It pulls from the open item file much as the aging does, but it also reads the A/R account field on each transaction, so it can show the account number and every transaction that used it.

The report shows only the periods you define. Run it for 07/01/00 to 07/31/00 and you get July's transactions and July's balance.

Reconciling the account for its whole life

Use a starting date of 01/01/1901. The report then covers everything.

Step 2: Run the G/L Trial Balance

Run the trial balance in account order, for the same accounts and the same date range. If the date ranges differ, the reconciliation will not work.

Step 3: Compare the right figures

Which figure you compare depends on the range:

What you are reconciling Compare against the A/R report
A single month, e.g. 7/1 – 7/31 The trial balance Net Change
The life of the account The trial balance Ending Balance

For a monthly reconciliation, do not use the trial balance's beginning and ending balances — the A/R report only reflects the balance for that month, which is the net change.

When the two do not match

Some transactions appear on one report and not the other. The usual causes:

  • A journal entry posted to the A/R account through G/L, with no corresponding transaction entered in A/R
  • Open items entered through the A/R Open Item Load, with no journal entry processed in G/L to reflect them
  • Entries completed in A/R after an interface, and never interfaced over to G/L

Two steps to tie the reports together:

  1. Run the A/R Distribution to G/L report and leave Print Transactions Already Interfaced to G/L unticked. Everything that appears has not been interfaced to G/L, and needs to be.
  2. Audit line by line, comparing the A/R Reconciliation report against the G/L Trial Balance.

The A/P side of the same job — with its own worksheet — is at Reconciling A/P with the general ledger.

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