Create Journal Entries in QuickBooks Online

Journal entries are an advanced feature of QuickBooks Online. Only if you have accounting experience or you’re doing all the accounting work yourselves, you should try making journal entries. Journal entries allow you to make adjustments by manually putting in debits and credits as would be completed in an older accounting system.

Most business transactions that you come across you would rarely, if ever, need to record journal entries for. Instead, you should tend to use native QuickBooks Online tools for primarily paying bills and doing deposits and the like.

Some examples of journal entries are correcting errors or summarizing depreciation of some assets. A journal entry may be in order to transfer the money from an income account into an expense account or one asset, liability, or equity account, into an income or expense account.

In this module, we are going to take you through how to set up multiple journal entries. We’ll teach you how to reverse them, delete them, and how to make them recurring. We’ll also show you in what ways you might apply journal entries in reports and in the Transaction Log. But before we get there, there is some background you need to understand-again, related to credits, debits and balancing accounts. So let’s get there.

Use of Credits and Debits in journal Entry in Quickbooks Online

The first step toward preparing accurate financial statements, therefore, is to record all credits and debits correctly. Recording all the debits and credits ensure all accounts are balanced.

The accounting system can be compared to a journal. All the transactions get recorded in chronological order, so all the transactions get reflected in the books as a journal entry. Every journal entry affects either an account with an amount to credit or an amount to debit. The case is different concerning the way the two types of accounts get affected by the debits and credits.Debits are found on the left side of an account. Accounts that are asset and expense will have a debit.

Credits go on the right hand of the account. Accounts that are liability or revenue shall be credited. The number of each debit must equal the number of each credit. Unless your accounting software packages report debits and credits as different, you will get an error if they are. There can, however be a journal entry that has a different number of debit or credit entries. In fact, there can be just one of either debits or credits in a journal entry with there being at least one of the other.

Recalling When to Debit and Credit

It often is not easy to recall when a given type of account within a is increased. Here is a brief summary of when to increase the account balances:

Assets Cash, accounts receivable Debit Liabilities Accounts payable, long term debt Credit Equity Common stock, retained earnings Credit Revenue Sales, gain on the sale of an asset Credit Expenses Wage expense; cost of goods sold Debit

For one other example, assume you are journalizing a $1,000 cash payment received from a customer. You debit cash account which is an asset and therefore the account will increase. You then credit accounts receivable, also an asset account, but which decreases, not increases. As such the balance sheet formula is unaffected since the same amount of the two assets is increased and then decreased.

Equipped with this knowledge of debits and credits, we will now walk through how to create a journal in QuickBooks Online.

What is Journal Entry?

To add a new journal you first click the New button at the bottom of the left-hand Navigation Pane. Then from the list select Journal Entry from the options under Other.

A journal entry is a two-line entry. For a simple entry you will move cash out of one account and into another.

To make this clear we’ll withdraw $100 from one account and deposit it into the other. The debit line will be: You use the Account dropdown to choose an account for the debit line, then fill in $100 for Debits.

We will put another $100 in a second account on the second line. We select another account from the Account dropdown, and we put the same amount that we debited in the first account into the Credit field.

Recording Depreciation by Journal Entry

Probably the most obvious use of a Journal Entry is to record depreciation, where so many assets simply depreciate with age. We may put this into the account called Depreciation. Let’s set up a new Journal Entry, and in the first line of that journal entry, type the Account field with the account called Depreciation.

Reversing a Journal Entry

You may enter a journal entry incorrectly. You may reverse it.

Go to Chart of Accounts. Under Your Company from the Header click on the gear-shaped Settings icon; the Chart of Accounts will be listed underneath.

At the Chart of Accounts you should find the account which entry you created. In the same line, click the View Register button in the Action column.

Erasing a Journal Entry

A journal entry can occur accidentally, and you want to cancel it, but be careful not to knock your accounts out of balance.

Erase a journal entry To delete a journal entry you’ve entered, follow these steps: Open your Chart of Accounts. You can find it just where you did when you learned how to delete a journal entry. The Chart of Accounts is located on the Accounts tab in the left-side Navigation Pane.

Locate your Chart of Accounts and the account you want. Go to View Register on the Action column. Find your journal entry on the register. You can filter out other kinds of entries by clicking the filter icon and checking on Journal Entry at Transaction Type.

  Journal Entry Posting

Adding an automatic journal Begin a new journal as we did above in this lesson. At the bottom of the Journal Entry page, click the Automatic button. It should change the page to a Journal Entry. It will be a recurring journal entry.

Viewing journal entries in the transaction journal

Any time you do anything in QuickBooks Online you are completing a series of events that rolls up into an overall general ledger. This auto-generates journal entries. Use the New button in the left-side Navigation Pane and click Vendors, Bill to pay a check to someone.

Journal import is very important because you must have some transactions you would want to take from some other accounting software to QuickBooks. Sorry – importing journal entry files is not supported entirely in all regions in which QuickBooks online is available.

If importing is not natively available, it will typically be achievable using some 3rd party add-on or maybe Transaction Pro. For now, though, because this will probably soon be the most universally accessible method for importing, let’s explore more about importing through QB Online. 

If you haven’t already activated the account you can enable it from the Chart of Accounts. Do this go to the Chart of Accounts and left side Navigation Pane click the New button, then Accounts, then Type and Detail Type for the account. Should be a name which is identical in the file.

Now you should have all set up to import. Click on the gear-shaped Settings icon that is located in the Header. Under the Tools heading select Import Data from the pull down menu.

Click Journal Entries from the Import Data window. On the next window click Browse and locate your csv or excel file location. Click Open, then Next.

Next, you will match your data. In other words, you match the fields on your spreadsheet to the corresponding headers. Once matched up, you’ll then click Next and then Start Import.

Once you have done that you can use the Search feature to find a particular transaction. Click the magnifying glass icon in the header to open up a search window. To narrow your result scroll down to the bottom of the search window and click the checkbox Advanced Search. Then on the advanced search, you’ll be able to narrow your result to journal entries by selecting Journal Entries from the very first dropdown menu.

Conclusion

From the article, we learn how to work with journal entries. You knew what they are used for and how to add, reverse, and delete them. You also learned how to run reports on them and importing into files.

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