If you use Quickbooks to keep track of your business’s financial transactions, you’re probably well aware of journal entries. In Quickbooks, a journal entry is a record of a credit or debit. Unbeknownst to many business owners, however, Quickbooks also supports the use of adjusting journal entries.
What Is an Adjusting Journal Entry?
An adjusting journal entry, as the name suggests, is a record of a credit or debit that automatically adjusts an account balance. In other words, it will force the account balance with which it’s associated to change. If you’re recording a debit for credit card fees, for example, you may want to use an adjusting journal entry. Once entered, the entry will automatically adjust the account balance to reflect the fees.
You can use adjusting journal entries for more than just recording credit card fees. Other times to consider using them include recording amortization, reversing accruals of expenses and adjusting taxes for interests or penalties. Keep in mind, however, that adjusting journal entries will automatically change the balance of the account to which they are connected.
Steps to Creating an Adjusting Journal Entry
In Quickbooks Online, you can create an adjusting journal entry in just a few easy steps. After logging in to your account, click the + button and select “Journal Entry” under “Other.” You should then see a message asking if this is an adjusting journal entry. Click the box next to this option so that it places it a checkmark inside the box. When finished, you can then enter the adjusting journal entry — just like you would for a normal journal entry. Upon clicking the “Save” button, the credit or debit will be recorded as an adjusting journal entry.
What Is the Adjusted Trial Balance?
You’ll probably see an adjusted trial balance when creating and using adjusting journal entries. Basically, an adjusted trial balance is a snapshot of all your account balances before the adjusting journal entries. It’s a good idea to review your adjusted trial balance to ensure it’s aligned with the rest of your financial transactions.
To pull up your adjusted trial balance, click the “Reports” link and search for the “adjusted trial balance.” On the adjusted trial balance page, you’ll see a list of all account balances and their respective adjusting journal entries before those entries have been applied.
Did this tutorial work for you? Let us know in the comments section below!