To create a journal entry in QuickBooks Online, select the “+ Create” button (also called the “+” or “New” button), then choose “Journal entry” from the menu. From there, you’ll fill in the date, accounts, and debit or credit amounts. The process is straightforward once you understand what QuickBooks expects in each field and when a journal entry is the right tool for the job.
When to Use a Journal Entry
QuickBooks has built-in forms for most everyday transactions. Invoices, bills, expenses, and bank deposits all record the necessary accounting behind the scenes. A manual journal entry is for situations those standard forms don’t cover cleanly.
The most common reasons to create a journal entry include:
- Adjusting entries at month-end or year-end: Recording accrued expenses, prepaid expense allocations, depreciation, or an allowance for doubtful accounts.
- Reclassifying a transaction: Moving an amount from one account to another when it was originally categorized incorrectly and editing the original transaction isn’t practical.
- Recording non-cash transactions: Owner contributions of equipment, barter transactions, or write-offs that don’t involve a payment or receipt.
- Opening balances: Entering account balances when you first set up QuickBooks or migrate from another system.
- Closing entries: Transferring revenue and expense balances into retained earnings at the end of an accounting period, though QuickBooks Online handles most of this automatically.
If a standard form exists for what you’re recording (a vendor bill, a customer payment, a bank deposit), use that form instead. Standard forms update reports, customer and vendor balances, and bank reconciliation data in ways that a raw journal entry does not.
Step-by-Step in QuickBooks Online
Open your QuickBooks Online account and follow these steps:
- Click the “+ Create” button in the upper-left area of the navigation bar.
- Under the “Other” column, select “Journal entry.”
- QuickBooks will open a blank journal entry form with a pre-filled date (today’s date) and an auto-assigned journal number. Change the date if you’re recording something for a prior period.
- In the first row, choose an account from the “Account” dropdown. Enter the amount in either the “Debits” or “Credits” column.
- In the next row, choose the offsetting account and place the same amount in the opposite column. Debits must equal credits before QuickBooks will let you save.
- Add a description in the “Description” field for each line. This is optional but highly recommended because it shows up in account registers and reports, making the entry easier to understand later.
- Click “Save and close” or “Save and new” if you have additional entries to make.
You can add more than two lines to a single journal entry. For example, if you’re splitting one expense across three departments, you might have one credit line and three debit lines. The total debits and total credits just need to match.
The Name Field
Each line of the journal entry has an optional “Name” field where you can assign a customer, vendor, or employee. This field becomes required in one important situation: if either line of your entry touches Accounts Receivable or Accounts Payable, you must select the specific customer or vendor. QuickBooks uses sub-ledgers to track what each customer owes you and what you owe each vendor. Without a name attached, the entry won’t tie back to the correct customer or vendor balance, and QuickBooks will flag an error or produce mismatched reports.
Step-by-Step in QuickBooks Desktop
The process in QuickBooks Desktop (Pro, Premier, or Enterprise) follows a similar logic with a slightly different navigation path:
- Go to the top menu bar and select “Company,” then “Make General Journal Entries.”
- QuickBooks will open a journal entry window. Confirm or change the date and entry number at the top.
- In the first row, select an account from the “Account” dropdown. Enter the debit or credit amount.
- Add the offsetting account on the next row with the balancing amount in the opposite column.
- Fill in the “Memo” field to describe the purpose of the entry. The memo appears in transaction reports and registers.
- Assign a name (customer, vendor, or employee) to any line that affects Accounts Receivable or Accounts Payable.
- Click “Save & Close” or “Save & New.”
Desktop versions also let you use the keyboard shortcut Ctrl+H to view transaction history, which is useful if you need to check whether a journal entry has already been recorded for a particular adjustment.
Multi-Line and Complex Entries
Many real-world journal entries involve more than two lines. A payroll accrual, for instance, might debit several expense accounts (wages, employer taxes, benefits) while crediting multiple liability accounts. QuickBooks handles this fine as long as the total debits equal the total credits.
When building a multi-line entry, use the “Description” or “Memo” field on every line, not just the first one. Six months from now, a line that says “December rent accrual” is far more useful than a blank row showing $2,500 to account 6100. If your accountant or bookkeeper reviews your books, clear descriptions save everyone time.
How to Reverse a Journal Entry
Reversing entries are common for month-end accruals. You record an accrual at the end of one month, then reverse it at the start of the next so the actual transaction can be recorded normally when it comes through. QuickBooks Online has a built-in reversal feature that saves you from manually creating the offsetting entry.
To reverse a journal entry in QuickBooks Online:
- Go to your Chart of Accounts and find the account associated with the journal entry.
- Select “View register” for that account.
- Locate the journal entry in the register. It will show “Journal” in the Reference Number or Type column.
- Click on the entry to expand it, then select “Edit” to open the full journal entry.
- Look for the “Reverse” option and select it, then click “Save.”
When you reverse an entry, QuickBooks creates a brand-new journal entry that flips the debits and credits. The original entry stays intact. The reversed entry keeps the original journal number with the letter “R” appended to it, and QuickBooks automatically dates the reversal to the first day of the following month. All details like accounts, names, and descriptions carry over from the original.
This is different from deleting a journal entry. Deleting removes the transaction entirely from your books, which can cause problems if you’ve already closed that period or reconciled the affected accounts. Reversing preserves the audit trail.
Tips for Cleaner Journal Entries
Consistency in how you create journal entries makes your books easier to review, audit, and troubleshoot. A few habits go a long way.
Use a numbering convention that makes entries easy to search. QuickBooks auto-assigns journal numbers, but you can override them. Some businesses prefix adjusting entries with “AJE” or year-end entries with “YE” so they’re immediately identifiable in reports. Whatever system you choose, stick with it.
Attach supporting documents when possible. QuickBooks Online lets you add file attachments to journal entries. If your entry is based on a depreciation schedule, loan amortization table, or an accountant’s worksheet, attaching the source document means you won’t have to hunt for it later.
Review the impact before saving by looking at the running balance of the affected accounts. After saving, pull up a Transaction Detail report filtered to that journal number to confirm everything posted where you expected. Catching a misposted entry the same day is far simpler than finding it during reconciliation weeks later.