Standard Journal Entry
The most common type of journal entry - used for manual GL adjustments.
When to Use
| Scenario | Example |
|---|---|
| Accruals | Accrue unpaid expenses at month-end |
| Deferrals | Defer prepaid expenses |
| Reclassifications | Move amounts between accounts |
| Corrections | Fix GL coding errors |
| Non-cash transactions | Record depreciation, bad debt |
| Year-end adjustments | Audit adjustments |
Creating a Standard Journal Entry
Navigation: Transactions > Financial > Make Journal Entries
Key Fields
| Field | Description |
|---|---|
| Date | Posting date for the entry |
| Posting Period | Period to post in |
| Subsidiary | Required for OneWorld |
| Account | GL account for each line |
| Debit/Credit | Amount and direction |
| Memo | Description for audit trail |
GL Example: Accrued Expense
SCENARIO: Accrue December utilities (bill not yet received)
═══════════════════════════════════════════════════════════════════════════════
December 31, 2024 - Accrual Entry:
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ 6200 Utilities Expense │ $2,500.00 │ │
│ 2150 Accrued Expenses │ │ $2,500.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $2,500.00 │ $2,500.00 │
└────────────────────────────────────┴────────────┴────────────┘
Memo: Accrue December 2024 utilities - estimated
Effect:
- December P&L includes utility expense
- Balance sheet shows liability for unpaid bill
January 15, 2025 - Reverse Accrual (when bill received):
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ 2150 Accrued Expenses │ $2,500.00 │ │
│ 6200 Utilities Expense │ │ $2,500.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $2,500.00 │ $2,500.00 │
└────────────────────────────────────┴────────────┴────────────┘
Then record actual Vendor Bill for $2,650.00
Net effect: January expense = $150 (variance from estimate)
GL Example: Prepaid Expense
SCENARIO: Record 12-month insurance premium paid upfront
═══════════════════════════════════════════════════════════════════════════════
January 1, 2024 - Pay $12,000 for annual insurance:
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ 1400 Prepaid Insurance │ $12,000.00 │ │
│ 1000 Bank Account │ │ $12,000.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $12,000.00 │ $12,000.00 │
└────────────────────────────────────┴────────────┴────────────┘
Monthly Amortization Entry (Jan-Dec):
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ 6100 Insurance Expense │ $1,000.00 │ │
│ 1400 Prepaid Insurance │ │ $1,000.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $1,000.00 │ $1,000.00 │
└────────────────────────────────────┴────────────┴────────────┘
Effect per month:
- $1,000 expense recognized
- Prepaid asset reduced by $1,000
- After 12 months: Prepaid = $0
GL Example: Reclassification
SCENARIO: Reclassify expense from wrong account
═══════════════════════════════════════════════════════════════════════════════
Original coding was wrong - office supplies coded to travel:
Reclassification Entry:
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ 6400 Office Supplies │ $350.00 │ │
│ 6300 Travel Expense │ │ $350.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $350.00 │ $350.00 │
└────────────────────────────────────┴────────────┴────────────┘
Memo: Reclass office supplies from travel - Invoice #1234
GL Example: Bad Debt Write-Off
SCENARIO: Write off uncollectible receivable
═══════════════════════════════════════════════════════════════════════════════
Direct Write-Off Method:
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ 6500 Bad Debt Expense │ $1,500.00 │ │
│ 1200 Accounts Receivable │ │ $1,500.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $1,500.00 │ $1,500.00 │
└────────────────────────────────────┴────────────┴────────────┘
Allowance Method (Estimate):
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ 6500 Bad Debt Expense │ $1,500.00 │ │
│ 1210 Allowance for Doubtful Accts │ │ $1,500.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $1,500.00 │ $1,500.00 │
└────────────────────────────────────┴────────────┴────────────┘
When Actually Written Off:
┌────────────────────────────────────┬────────────┬────────────┐
│ Account │ Debit │ Credit │
├────────────────────────────────────┼────────────┼────────────┤
│ 1210 Allowance for Doubtful Accts │ $1,500.00 │ │
│ 1200 Accounts Receivable │ │ $1,500.00 │
├────────────────────────────────────┼────────────┼────────────┤
│ TOTAL │ $1,500.00 │ $1,500.00 │
└────────────────────────────────────┴────────────┴────────────┘
Common Accrual Entries
| Accrual Type | Debit | Credit |
|---|---|---|
| Wages | Wage Expense | Accrued Wages |
| Interest | Interest Expense | Accrued Interest |
| Utilities | Utilities Expense | Accrued Expenses |
| Rent | Rent Expense | Accrued Rent |
| Taxes | Tax Expense | Accrued Taxes |
Next Steps
- Intercompany Journal - Between subsidiaries
- Recurring & Reversing - Memorized and auto-reversing entries