Journal entries, as an accounting concept, can take a while to grasp. The good news? QuickBooks creates almost all of your journal entries for you automatically. The other good news? If you do have to create a journal entry, it only takes five steps.
In this post, we’ll explain when you need to create a journal entry in QuickBooks and walk you through the journal entry process.
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When To Create A Journal Entry In QuickBooks Pro
In double-entry accounting, a journal entry is used to log which debit and credit accounts are affected by a given transaction. QuickBooks takes care of all the double-entry accounting behind the scenes.
Whenever you enter a transaction (like an invoice or bill) in QuickBooks, the software automatically creates a journal entry for you. Take this bill for example:
If we use the command shortcut Ctrl + Y, we can see the journal entry that QuickBooks automatically created for this transaction…
The entry tells us that Accounts Payable was credited $49.95 and the Other Business Expenses Account was debited $49.95. The debits and credits balance.
Again, QuickBooks creates an automatic journal entry for every transaction entered in QuickBooks. Additionally, the software will adjust the journal entries if you edit or change the transaction. So, most often, you won’t need to worry about it.
However, there are a few cases where you may need to manually create a journal entry. For example, you’ll need to create an entry for depreciation. QuickBooks provides a list of all the instances where you may need a journal entry. In such instances, follow these five steps:
Create A Journal Entry
To begin, go to Company>Make General Journal Entries…
You may see a notification letting you know that QuickBooks automatically numbers journal entries. You can eventually turn off auto-sequencing or change the beginning number, but for now, just click “OK” to get started.
Step 1: Enter Date
Use the drop-down calendar to enter a date for your journal entry. For our company, we’re going to create a depreciation journal entry for the end of 2017.
Step 2: Adjust Entry Number (Optional)
At this point, you can adjust the beginning sequencing number of your journal entry. QuickBooks will automatically number your journal entries from here on out.
Step 3: Add Debited Account
In journal entries, you list the debited accounts first and then the credited accounts. If you need a refresher on debits and credits, read our Quick Guide To Accounting Terms and Concepts.
Select the account being debited. Then enter the amount under “debit.” If desired, you can also add a memo, name, and mark the amount as billable.
Step 4: Add Credited Account
Select the credited account from the drop-down menu. QuickBooks automatically enters the credited amount under “credit” because the debits and credits must always match. If desired, you can you can also add a memo, a name, and mark the amount as billable.
Step 5: Save
Check that all of the information looks correct and that the debits and credits match. Then click “Save & Close” or “Save & New” if you’re planning on creating another journal entry.
For troubleshooting issues, check out the QuickBooks Community or call QuickBooks directly. If you have any further questions, leave a comment below and we’ll do our best to help you.