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Porsche944na
July 11, 2024
Question

Journal entry or new transaction?

  • July 11, 2024
  • 2 replies
  • 0 views

Quite a I while ago, I made an $4k interest payment on a loan.  I discovered that for some unknown reason, my accountant reversed this with a journal entry by incorrectly crediting the cash back into my checking account and deleting the corresponding interest expense (sorry, he has no recollection and cannot tell me why this happened).  Of course, I really did have this expense, so my checking account balance is off by $4k.

 

Should I:

A - reverse his journal entry with another journal entry canceling it out as if it never happened,

or

B - Just enter it as a new transaction, as if I paid the interest today?

 

It seems that both of these corrections would have the same net effect on all all my accounts and expenses.  Any suggestions?

2 replies

A
AnneMariee
July 11, 2024

It's important to maintain accurate financial records, Porsche944na. Let me help you with this task.

 

Yes, both options would have the same effect on your books. However, you'd want to consider how you want your records to reflect the actual transaction history. Additionally, I suggest checking in with an accountant for guidance on which method would suit your business workflow and professional advice to ensure your records are accurate.

 

For more details, please feel free to check out these resources:

 

 

For future reference, here's a guide to ensuring your QuickBooks accounts match your real-life ones: Learn the reconcile workflow in QuickBooks.

 

Come back to this post if you have any other questions about recording your transactions in QuickBooks, Porsche944na. The Community is always available for you.

Rainflurry
Rainflurry
July 11, 2024

@Porsche944na 

 

To answer your question, it's necessary to know:

 

1) The date you made the $4K payment.

2) Was this payment for prepaid interest (interest that extends beyond the end of the tax year in which the payment was made)?

3) What is the date of your accountant's reversing journal entry?

4) Was the $4K interest expense deducted on your tax return in the same year the payment was made?

 

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