Journal Entries in QuickBooks: A How-To From ProOnGo
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?
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.
|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|