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Posts are primarily about QuickBooks, Xero, expense reports, and other topics useful to small business owners, CPAs, and ProAdvisors.


Journal Entries in QuickBooks: A How-To From ProOnGo

August 9th, 2012

Dear Journal,
            Today I really messed up my QuickBooks company file…

Journal entries in QuickBooks are something  which are oftentimes used incorrectly, messing up your reports and sending your ProAdvisor running. The ‘old school’ method of accounting dictates each transaction should be an entry in a literal journal, so it’s not uncommon for people to intuitively use journal entries in QuickBooks to record various transactions. QuickBooks is a form-based accounting program, though, meaning that it has specific forms to enter each type of transaction. For example, if you use a credit card to make a purchase, you should use the ‘Enter Credit Card Charges’ form in QuickBooks. If you write a check, you should use the ‘Write Checks’ form. Get it?

Journal entries in QuickBooks make me so mad!

So, what are journal entries in QuickBooks? Journal entries in QuickBooks is a way for your ProAdvisor or CPA (and I’d recommend leaving it up to them) to record a transaction for which there is not already a designated form in QuickBooks. Most of the time, journal entries are used to move money around; from one job to another, from one account to another (NOTE: do NOT use journal entries to move money between two bank accounts), or from one class to another. Journal entries are also used to record amortization and depreciation. Journal entries are also used to make record of payroll information if a company outsources that, but more on that complicated process later. Year-end adjustments are also commonly recorded by way of journal entries in QuickBooks.

Perhaps the best reason to avoid using journal entries in QuickBooks is that they are not compatible with items, which are the back-bone of job costing in QuickBooks. There are ways to ‘trick’ QuickBooks into using journal entries in job-costing, but why over-complicate your company file?

Let me just say, though; if you’re confused about journal entries, you should let your accountant handle them. While it’s possible to delete general journal entries, doing so can wreak havoc on your books.

If you’re entering any of the following transactions into QuickBooks as journal entries, you’re doing it wrong. Don’t worry, though! The list also includes the proper pathways to entering these transactions.

Task Go to…
Make purchase using cash Petty Cash Register
Make purchase using credit card Enter credit card charges
Make purchase using check Write check
Make purchase using Debit Card Write check; Check # = “Debit”
Record payment of shipping/postage fees Write Check; Check # = “Fees”; Expense Account = “shipping fees”
Record payment of credit card fees Write Check; Check # = “Fees”; Expense Account = “credit card fees”
Record bill Enter Bills
Pay Bill Pay Bills
Create invoice Create Invoice
Receive payment for invoice Receive Payments
Issue refund to client Refunds & Credits
Issue credit to client Refunds & Credits
Reimburse employee for expenses Write Check
Reimburse employee for mileage Write Check
Record time activities Enter Time
Set up bank account with no balance Chart of Accounts > Account > New > Banking
Set up bank account with opening balance Chart of Accounts > Account > New > Bank > click “Enter Opening Balance”
Transfer money between bank accounts Banking > Transfer Funds
Record sales tax received Manage Sales Tax
Record sales tax paid Manage Sales Tax
Void transaction paid Open transaction > Right click and select “Void”
Void transaction received Open transaction > Right click and select “Void”
Make deposit Banking > Make Deposits

ProOnGo fortunately does not create journal entries – check out the ways that ProOnGo does sync to QuickBooks.

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