Record QuickBooks Opening Balance Journal Entry

Managing your business’s accounting is often complicated—even with the help of accounting software like QuickBooks. That said, albeit you outsource your bookkeeping or accounting, it often necessary to understand how some basic features work. If you’re using QuickBooks Desktop, you’ll be unclear on the way to create a journal entry. A journal entry, as a reminder, maybe a transaction that entered directly into your business ledger. So—how does one make a QuickBooks Opening Balance Journal Entry?

What Is QuickBooks Opening Balance Journal Entry?

First, let’s clarify exactly what a QuickBooks journal entry is. Generally, QuickBooks will automatically record transactions as they occur—you’ll record an invoice, sales receipt, bill, check, etc.—and QuickBooks will pull this data into the overall ledger.

However, if you usually got to record a transaction manually, wish to correct a problem, for instance, you’ll require to use the journal entry feature within QuickBooks Desktop. Once you post a journal entry in QuickBooks, or in the other accounting software, it must balance—any debit you create must have a corresponding credit and the other way around.

For 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 get to list debit to the insurance a/c and credit to the bank account.

How to Record a QuickBooks Journal Entry?

With the fundamentals in mind, let’s break down exactly the way to record a journal entry in QuickBooks.

As we mentioned, we’ll use “prepaid insurance” during this example.

Step 1: Navigate to the journal entry feature.

The first step is easy—you’ll get to navigate to the part of your QuickBooks software that allows you to enter journal entries. If you click the + icon at the highest right of your file, you’ll see a dropdown menu called “Create” that lists “Journal Entry” within the farthest column on the right-hand side.

Once you’ve ticked “Journal Entry” you’ll operate to the entry itself to fill within the required data.

Step 2: Fill within the date and journal number.

The journal entry form in QuickBooks is honestly easy. Once you have got involved in this type, you get to first edit the journal date. QuickBooks will automatically pick within the current date, so if you’re entering a journal entry from a past month or day, you’ll require to make certain to record the right date.

Next, you’ll want to fill within the journal number. during this example, the journal number is 151—QuickBooks will automatically calculate any new journal entries sequentially consistent with this number.

Step 3: Enter the accurate accounts within the “Category” line.

In this example, we’re creating a journal entry for prepaid rental insurance. Because rental insurance is usually prepaid for a month or a year, it’s considered an “other current asset” to start out, but must be expensed out because the year goes on, monthly. This being said, you’ll book the prepaid asset utilizing a check, but you’ll use a general journal entry also.

With this in mind, we’ll be adding two accounts within the category column. the primary account, from your chart of accounts, is that the “Company bank account .” This is often the account that will be losing the cash once you buy your rental insurance. The second account, on the opposite hand, is “Prepaid Insurance Account.” This is often the account that will be gaining the cash you’re using to prepay for your insurance for the year. In any QuickBooks journal entry, there’ll always be two accounts, one to credit and one to debit.

Step 4: Enter the debit and credit amounts.

Once you’ve pulled the right accounts, you’ll fill within the corresponding debits and credits. As you’ll see, rental insurance costs $1,200—so you’d add credit to the bank account and debit to the prepaid insurance account.

By the character of a journal entry, you’re impacting your books, in other words, the overall ledger. However, it’s also important that a journal entry usually balanced. The debit column has got to balance the credit column, regardless of what percentage lines the entry is. Therefore, if you were listing multiple payments within this one entry, you’d need to make sure that debits and credits were equal at the top of the entry.

Step 5: Add an outline and save.

The final step needed to finish your QuickBooks journal entry is to feature an outline. As you’ll see in our example above, the outline explains that this journal entry is prepaying for rental insurance. After you’ve filled within the description, you’ll save the journal entry and shut it.

Ultimately, it’s fairly simple to record a journal entry in QuickBooks. This being said, a QuickBooks journal entry is probably the clearest example of double-entry accounting—when something is debited, something else is usually credited. In this way, every transaction within QuickBooks is often thought of as sort of a journal entry.

A customer invoice, for instance, debits assets and credits revenue. A vendor bill, on the opposite hand, credits accounts payable and debits the value of products sold or expenses. In this way, regardless of what transaction you enter into QuickBooks Online journal entry goes on behind the scenes.

Creating a QuickBooks Journal Entry Report

Now that we’ve explained the way to record a QuickBooks Opening Balance journal entry —using our prepaid insurance example—it’s worth mentioning that you simply also can create a report within QuickBooks to stay track of your journal entries.

This report is an Accountant report, called “Journal.”

You can open the journal report under “Reports” and click on customize to run the report exclusively for journal entries. You’ll choose “Journal Entry” under “Transaction Type” then you’ll be ready to run the report.

The Journal report feature has pulled a report showing all of your journal entries. You’ll save this report within your system (with the customizations you made to the transaction type) to simply run it as frequently as you would like to.

At the end of the day, once you’ve seen it step-by-step, it’s fairly easy to make and record a QuickBooks opening balance journal entry. Although QuickBooks typically will perform this function behind the scenes. It’s important to know how to do it yourself. In case you need to edit a mistake or even just manually enter a transaction.

Read Also: QuickBooks Desktop Premier 2020 New and Improved

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