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Libbystaggs
August 16, 2023
Question

Clearing Journal Entries

  • August 16, 2023
  • 2 replies
  • 0 views

Hello, 

When completing year end for a client last year, the accountant had me create a number of journal entries. We are working on year end for this year and now those journal entries are sitting in the account for the bank causing the general ledger and trial balance to be off by that amount. She has asked me to clear the journal entries but I cannot figure out how to do that in quickbooks - and is the accountant is not offering any solutions. I do not want to delete them as that will throw off last years year end numbers. But I need them to be cleared from the bank so that this years numbers can balance. Is there a way to clear these journal entries without deleting them? 

2 replies

MariaSoledadG
MariaSoledadG
August 16, 2023

 I have some information that I want to share about clearing journal entries, Libby.

 

Correcting entries in accounting is used to rectify the mistakes made while recording the financial transactions in the books of account of the business.

 

In QuickBooks Online (QBO), the only way to clear journal entries is to either reverse or delete them. If ever there's a need to allocate a transaction between two accounting periods or fix a debit and credit error, you can follow the steps outlined below on how to reverse it:

 

  1. Go to the Gear icon and then Chart of accounts.
  2. Locate the account you created the journal entry for. Then select View register.
  3. Find the journal entry in the account register. The word "Journal" should be in the Ref No. or Type column.
  4. Choose the journal entry to expand the view. Then Edit.
  5. Press Reverse.
  6. Hit Save.

 

Once done, QuickBooks creates a journal entry to balance the transaction. However, if you've created the entry by mistake, check out this article on how you can delete them: Reverse Or Delete A Journal Entry In QuickBooks Online.

 

Beyond that, when correcting a balance, you'll only have to perform the same approach which is to record it as a Journal entry. 

 

Furthermore, learn how you can print single or multiple entries on one report. I've got this article for more details: Print A Journal Entry Report In QuickBooks Online.

 

Feel free to comment below if you have any questions when clearing the journal entry. I'm always here to further assist you any time of the day. Have a nice day!

L
LibbystaggsAuthor
August 16, 2023

Thank you for your response! 

When I reverse the journal entry won't it cause the accounts listed in the entry to go out of balance? 

JaeAnnC
JaeAnnC
August 16, 2023

It's good to have you back in this thread, @Libbystaggs. Please allow me to explain how reversing a journal entry works in QuickBooks Online (QBO).

 

You can reverse a journal entry to allocate a transaction between two accounting periods or correct a debit and credit error. Doing so switches the debits and credits, but the initial journal entry is left intact. 

 

To address your question, no. It doesn't make your accounts go out of balance. QBO generates a new journal entry to balance the one you reversed. It records the modification you made and contains slightly different information. Please refer to the following:

 

  • The new journal entry adds the letter "R" while retaining the old journal number. It indicates reconciled.
  • The new journal entry is dated the first day of the month following the initial date.
  • The new journal entry preserves the same info, such as the Account, Name, and Description, as the original journal entry.

 

Moreover, you may also create an adjusting journal entry to offset an account's total balance. Accountants usually utilize this to resolve minor errors or record uncategorized transactions.

 

Keep me posted on your future concerns about journal entries by leaving a reply in this thread. I'll be there right away to respond to your questions. Stay safe.

Rainflurry
Rainflurry
August 16, 2023

@Libbystaggs 

 

Something seems off.  Year-end adjusting journal entries (AJEs) that posted to a bank account should not need to be reversed.  Obviously, as you mentioned, you can't delete them.  You can reverse them (debit the credit and credit the debit) of those year-end AJEs, but I'm having a difficult time thinking of a scenario where the bank account is debited or credited via an AJE, only to be reversed in the new year.  If the bank account was off and required an AJE, it should not need to be reversed.  Can you provide the year-end AJEs that you're referencing?     

L
LibbystaggsAuthor
August 16, 2023

I agree, something is off but I'm not sure where to go from here! 

The adjusting journal entries are as follows: 

 

Debit - Bank account 

Credit - GST payable 

The accountants description was: Reverse sales tax payment on May 26th, posted twice - one is sitting in uncleared cheques in the bank reconcilliation

 

Credit - Bank Account 

Credit - Uncategorized Asset 

Debit - Yearly over/short 

Debit - Gst Payable 

Accountants Description - to balance trial balance and income statement to amount reported on year end

 

Credit - Bank Account 

Credit - Accounts Receivable 

Debit - Yearly Over/Short 

Accountants Description  - Adjust bank balance to bank statement and outstanding transactions to year end

 

The bottom two are from year end 2 years ago that have not been dealt with, and the first one if from this current year end. 

Rainflurry
Rainflurry
August 16, 2023

@Libbystaggs 

 

Great, thanks for posting the AJEs.

 

"Debit - Bank account 

Credit - GST payable 

The accountants description was: Reverse sales tax payment on May 26th, posted twice - one is sitting in uncleared cheques in the bank reconcilliation"

 

This adjusting entry should have offset the duplicate check sitting as uncleared in the bank reconciliation.  It should have been cleared against the duplicate check, thereby cancelling each other out and not impacting the bank balance.  Is the uncleared check still sitting as uncleared in the bank reconciliation?  If so, clear it against the AJE entry and you should be good to go.  If the uncleared check is not in the bank reconciliation, where did it go?  You may need to recreate that duplicate uncleared check if it was deleted.

 

"Credit - Bank Account 

Credit - Uncategorized Asset 

Debit - Yearly over/short 

Debit - Gst Payable 

Accountants Description - to balance trial balance and income statement to amount reported on year end"

 

"Credit - Bank Account 

Credit - Accounts Receivable 

Debit - Yearly Over/Short 

Accountants Description  - Adjust bank balance to bank statement and outstanding transactions to year end"

 

Both of these entries are similar. If the bank balance was off at year-end, these AJEs were created to allow it to be reconciled.  If it has been reconciled (presumably it has in the past year and a half), then how was it reconciled without these AJEs being cleared?  You may need to create an AJE to bring the bank account in balance.  If you need to increase the balance, debit Bank Account, credit Yearly Over/Short.  If you need to decrease the balance, debit Bank Account, credit Yearly Over/Short.  

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