Just how to Record a Journal Entry in QuickBooks Online
How to Make a QuickBooks Journal Entry in 5 Steps
Navigate into the journal entry feature in QuickBooks Online.
Fill out the date and journal number.
Enter the correct accounts in the “Category” column.
Enter the debit and credit amounts through to the entry is balanced.
Add a description and save.
Managing your business’s accounting can be complicated—even because of the assistance of accounting software like QuickBooks. This being said, even though you outsource your bookkeeping or accounting, it’s often useful to know the way some basic features work. If you’re using QuickBooks Online, perhaps you are unclear about how to make a journal entry. A journal entry, as a reminder, is a transaction that’s entered right to your business’s general ledger. So—how do you make a QuickBooks journal entry?
We’re here to break it down. We’ll show you the five basic steps it is possible to follow to Record A Journal Entry In QuickBooks on the internet and get a leg up on managing your accounting processes.
What exactly is a QuickBooks Journal Entry?
First, let’s clarify precisely what a QuickBooks journal entry is. Generally, QuickBooks will automatically record transactions while they occur—you’ll record an invoice, sales receipt, bill, check, etc.—and QuickBooks will pull this data into the general ledger.
However, should you ever need certainly to enter a transaction manually, love to correct an error, for example, you’ll want to use the journal entry feature within QuickBooks Online. Whenever you post a journal entry in QuickBooks, or in any other accounting software, it should balance—any debit you make must have a corresponding credit and vice versa.
As an example, as you’ll see below, if you’re recording a journal entry for a check you wrote for a year’s worth of insurance, you’ll need certainly to list a debit to your insurance account and a credit to the bank account.
How to Record a QuickBooks Journal Entry
With all the basics at heart, let’s break down exactly just how to record a journal entry in QuickBooks.
As we mentioned, we’ll be using “prepaid insurance” in this example.
Step 1: Navigate to the journal entry feature.
The initial step is simple—you’ll need to navigate into the element of your QuickBooks Online software that allows one to post journal entries. In the event that you click on the + icon at the very top right of your file, you’ll see a dropdown menu called “Create” that lists “Journal Entry” within the farthest column in the right-hand side.
When you’ve clicked “Journal Entry” you’ll navigate to the entry itself to fill out the required information.
Step two: Fill in the date and journal number.
As you can see below, the journal entry form in QuickBooks on the internet is fairly easy. As soon as you’ve brought up this form, you’ll desire to first edit the journal date. QuickBooks will automatically pull in the current date, therefore if you’re recording a journal entry from a previous month or day, you’ll want to make sure to go into the correct date.
Next, you’ll like to fill in the journal number. In this example, the journal number is 151—QuickBooks will automatically number any new journal entries sequentially following this number (put another way, the second one would be 152).
Step three: Enter the correct accounts within the “Category” column.
In this example, we’re creating a journal entry for prepaid rental insurance. Because rental insurance is usually prepaid for 30 days or a year, it’s considered an “other current asset” to start out, but needs to be expensed out once the year goes on, monthly. This being said, you might book the prepaid asset using a check, but you can use a broad journal entry as well.
Being mindful of this, we’ll be adding two accounts within the category column. The very first account, from your own chart of accounts, is the “Company Checking Account.” This is the account which will be losing the funds whenever you pay for your rental insurance. The next account, having said that, could be the “Prepaid Insurance Account.” This is basically the account that will be gaining the cash you’re using to prepay for your insurance for the year. In every QuickBooks journal entry, there will always be two accounts, one to credit and another to debit.
Step 4: Enter the debit and credit amounts.
As soon as you’ve pulled the appropriate accounts, you’ll fill in the corresponding debits and credits. As you care able to see, rental insurance costs $1,200—so you would add a credit to the bank checking account and a debit to the prepaid insurance account.
By the nature of a journal entry, you’re impacting your books, simply put, the overall ledger. However, it is also important that a journal entry is always balanced. The debit column needs to balance the credit column, no matter what many lines the entry is. Therefore, if you were listing multiple payments inside this one entry, you will have to make sure the debits and credits were equal at the conclusion of the entry.
Step 5: Add a description and save.
The final step needed to complete your QuickBooks journal entry is always to add a description. As you care able to see within our example above, the description explains that this journal entry is prepaying for rental insurance. After you’ve filled within the description, you’ll save the journal entry and close it.
Ultimately, it is quite simple to record a journal entry in QuickBooks Online. This being said, a QuickBooks journal entry is probably the clearest exemplory case of double-entry accounting—when something is debited, another thing is definitely credited. This way, every transaction within QuickBooks may be thought of like a journal entry.
An individual invoice, for instance, debits accounts receivable and credits revenue. A vendor bill, on the other hand, credits accounts payable and debits the price of goods sold or expenses. In this manner, it doesn't matter what transaction you get into QuickBooks Online a journal entry is going on behind the scenes.
How Transactions Post in QuickBooks Online
Once we stated earlier, QuickBooks typically pulls the info essential to add a transaction to your general ledger automatically. When this occurs, a journal entry is basically happening behind the scenes. Let’s take a look at how that really works:
If, as an example, we had paid for the rental insurance using a check, you would enter that check as such:
To see the procedure that occurs when you enter this look at QuickBooks, you can click the “More” tab at the bottom and then “Transaction Journal.”
quickbooks journal entry
Whenever you click the transaction journal, you can view the automatic “journal entry” that’s happening behind the check. As you’ll see below, the Check adds a credit of $1,200 into the bank checking account and a debit of $1,200 towards the prepaid insurance account—just once we completed in our example above.
quickbooks journal entry
How exactly to Create a Recurring Journal Entry in QuickBooks Online
So, in our example above, we credited the business bank account and debited the prepaid insurance account, however, because we prepaid for a year of insurance, maybe you are wondering just how to actually expense out this cost, monthly, since the year goes on.
For this, we would create another journal entry. In this instance, we’d fill in the same information, but instead of crediting the bank account, we’ll credit the prepaid insurance account and debit the specific insurance expense account.
quickbooks journal entry
As you can plainly see, for the month of January, this journal entry just took $100 (1/12 regarding the total payment) through the prepaid insurance asset account and moved it to your actual insurance expense account—meaning it had been moved from the Balance Sheet to your Profit and Loss. You would perform this journal entry every month and may automate the procedure by simply making it “recurring.”
To do this, you’ll click on the “make recurring” text in the bottom associated with the journal entry. Now this same journal entry will repeat each month through the termination of the entire year.
quickbooks journal entry
This being said, you may begin from the Recurring Transactions list beneath the Gear Icon during the upper-right corner for the QuickBooks Online file, and create this repetitive journal entry this way as well.
quickbooks journal entry
In this situation, you would click “Recurring Transactions” and then “Select New” and finally, choose “Journal Entry” from the Transaction Type drop-down menu:
quickbooks journal entry
As shown below, this may pull up a “Recurring Journal Entry” form where you’ll be able to fill out the exact same information once we illustrated into the example above. You’ll credit the prepaid insurance account and debit the insurance coverage expense account and indicate that this entry should recur monthly. You'll be able to choose a start date and a conclusion date.
We hope this article will be worthy and useful to learn to Record A Journal Entry In QuickBooks. Should you want to learn more help and greatest support from professional experts, dial QuickBooks Support Phone number anytime.