Creating an adjustment entry for a specific bank account resets your Wave balance to match your bank balance on a specific date. Adjustment entries can be used if you have entered transactions in previous fiscal years, but only need to reconcile the current fiscal year.
There can be accounting implications if your previous years or periods are not reconciled. Ask an accountant for guidance on whether this is the right decision for your business.
Create an adjustment entry
- Find the ending bank balance on the last day of your previous fiscal year from your online banking, or a historical statement.
- On the left navigation menu, click Reports.
- Click Trial Balance to generate a report.
Click the calendar icon, then set the date as the last day of your previous fiscal year. For example, if the current fiscal year that you’re reconciling began January 1, 2019, you would select the date December 31, 2018.
This report will now show you the Wave balance of the account you need to reconcile as of this date.
- Calculate the difference between your bank balance found in step 1 and the Wave balance you found in step 4.
- Next, you will create a separate account to use to offset the change made to your account balance. In the left-hand navigation menu, go to Accounting > Chart of Accounts.
- Click Add a New Account.
- In the Account Type drop-down, scroll down to the Equity section, then select Business Owner Contribution and Drawing.
- Enter an account name, such as Uncategorized Equity, and add any other relevant details.
- Click Save.
- In the left navigation menu, head to Accounting > Transactions.
- Click More at the top right, then click Add journal transaction.
Select the accounts to debit and credit. These are the account you want to reconcile, and the account created in step 9, Uncategorized Equity.
A debit increases an asset account, like your checking account, and decreases a liability account, like your credit card.
Enter the amount of the balance difference you found in step 5 to adjust the balance of the bank account.
If the Wave balance is higher than the bank balance, decrease the Wave balance. If the Wave balance is lower than the bank balance, increase the Wave balance. For example, if the Wave balance is $62.35 less than the checking account balance, you would debit the checking account and credit the Uncategorized Equity account.
Reconcile your previous fiscal period
Now that you’ve added an adjustment entry, you can return to the Reconciliation page to continue your reconciliation.
Learn how reconciliation works in Wave in Reconcile your books.
- On the left-hand navigation menu, go to Accounting > Reconciliation. On the accounts list page, find the account that you just adjusted.
- If you haven’t yet reconciled the account, click Get Started. If you have started, click the arrow next to the account balance to expand to the account timeline view, then click Add period.
- Enter the bank account's ending balance for the date of the adjustment entry you created in part 1 of this tutorial.
- Click Save.
The period ending on the last day of your previous fiscal year is now reconciled.