Creating Manual Journal Entries

#When to Use Journal Entries

Create manual journal entries for:

Adjustments - Fix errors in posting or accounts

Accruals - Record expenses incurred but not yet billed (e.g., rent accrual)

Deferrals - Spread expenses over future periods (e.g., insurance prepayment)

Corrections - Reverse and correct prior entries

Consolidation - Eliminate intercompany entries

Custom entries - Any GL transaction not handled by AP/AR/Payments

Bank reconciliation adjustments - Small differences between bank and ledger amounts (e.g., rounding, fees)

Tip: If you need to create a journal entry to resolve a bank reconciliation discrepancy (such as a small amount difference between the bank transaction and your ledger), you can use the Journal entry option directly within bank reconciliation. This creates and matches the journal entry in one step, saving you from having to manually create the JE first and then return to match it. See Resolving Discrepancies for more details.

#Creating a Simple Journal Entry

To create a basic journal entry:

1. Go to General Ledger > Journal Entries
2. Click Create Journal Entry
3. Enter details:
   • Description - What is this entry for
   • Posting Date - When to post to GL
   • Company Entity - Which entity (for multi-entity companies)
   • Currency - Currency of the entry (if multi-currency)
4. Add lines:
   • Click Add Line
   • Select GL Account
   • Enter Debit or Credit amount
   • Add Description (optional)
   • Repeat for each account
5. System validates that debits = credits
6. Click Post

The entry is now posted to the GL.

#Entry Structure

A journal entry consists of:

Header:

• Description (required) - Describes what the entry is for
• Posting date (required) - When it posts
• Company entity (required) - Which entity
• Currency (required)
• Custom properties (optional) - Department, project, etc.

Lines:

• GL Account (required)
• Debit amount (optional) - If account is being increased
• Credit amount (optional) - If account is being decreased
• Description (optional)
• Custom properties per line (optional)

Each entry must have at least 2 lines, and debits must equal credits.

#Double-Entry Bookkeeping

All entries use double-entry bookkeeping:

Example: Accrue rent expense

• Debit: Rent Expense (5000) - $1,000
• Credit: Accrued Rent Payable (2500) - $1,000

Both sides must balance. This ensures the accounting equation remains true.

#Multi-Line Entries

Create entries with many lines:

1. Add lines one at a time
2. View running total of debits and credits
3. Continue adding until balanced
4. System shows error if not balanced

Example: Month-end allocation of shared expense to departments

Debit: Department A Expense 40% - $4,000
Debit: Department B Expense 30% - $3,000
Debit: Department C Expense 30% - $3,000
Credit: Shared Expense Clearing - $10,000

#Reversing Entries

Create entries that reverse previous entries:

1. Open the original entry
2. Click Create Reversal
3. System automatically:
   • Creates new entry with opposite amounts
   • Links to original for audit trail
   • Shows both entries side by side
4. Choose posting date for reversal
5. Click Post

Reversals are used to undo entries while maintaining audit trail.

#Recurring Entries

Set up entries that post automatically each period:

1. Create a journal entry as normal
2. Before posting, click Make Recurring
3. Set recurrence:
   • Frequency (monthly, quarterly, annually)
   • Start and end dates
   • Adjustment rules (e.g., increase amount 5% each year)
4. Click Save

Recurring entries automatically post on schedule. For monthly rent accrual, create once and it posts every month.

#Multi-Entity Entries

For multi-entity companies:

Same entity entry:

• All lines post to the same company entity's GL

Intercompany entry:

• Some lines post to entity A, others to entity B
• Creates payable/receivable between entities
• Consolidated reporting eliminates intercompany amounts

To create intercompany entry:

1. Add lines to different entities
2. System tracks which entity each line posts to
3. Consolidation logic handles elimination

#FX and Multi-Currency

For entries in foreign currencies:

1. Select the currency (EUR, GBP, JPY, etc.)
2. Enter amounts in that currency
3. Specify posting date for FX rate
4. Light converts to local and group currencies
5. Stores all three amounts in GL

When multi-entity, each entity can have different local currencies.

#Tax-Related Entries

Some entries involve tax. For example:

Sales tax entry:

• Debit: Sales Tax Expense - $1,000
• Credit: Sales Tax Payable - $1,000

VAT entry:

• Debit: VAT Receivable - $5,000
• Credit: VAT Expense - $5,000

GL accounts typically have a tax designation for proper reporting.

#Workflow Approval for Entries

Depending on settings, journal entries may require approval:

1. Entry created in DRAFT status
2. User submits for approval
3. Approver reviews and approves/rejects
4. If approved, user can post
5. If rejected, returns to DRAFT

Large entries or special types may have approval workflows.

#Batch Journal Entries

Create multiple entries at once:

1. Go to General Ledger > Journal Entries
2. Click Import Batch
3. Upload CSV with entries:
   • Description, Date, Account, Amount, DebitOrCredit
   • One line per row
4. System validates format
5. Creates all entries in DRAFT status
6. Review before posting

Batch import is faster than entering individually.

#Editing Entries

If an entry is still in DRAFT:

1. Open the entry
2. Edit any fields or lines
3. Add or remove lines
4. Click Save (not Post yet)

Once posted, you cannot edit directly. Instead:

1. Create a reversing entry
2. Create a new correcting entry
3. Or modify (see document lifecycle article)

#Approving and Posting

Once an entry is ready:

1. If approval is required:
   • Submit for approval
   • Wait for approver
   • Get approval or rejection
2. Click Post to finalize
3. Entry posts to GL, becomes immutable

Posting is the point of no return—the entry is now in the permanent GL.

#Common Entry Templates

Accrual template:

Description: Monthly rent accrual - [Month]
Debit: Rent Expense (5500)
Credit: Accrued Rent (2750)

Depreciation template:

Description: Monthly depreciation - [Asset]
Debit: Depreciation Expense (5600)
Credit: Accumulated Depreciation (1800)

Intercompany allocation:

Description: Allocate headquarters costs
Debit: Entity A Expense (Entity A GL 5700)
Debit: Entity B Expense (Entity B GL 5700)
Credit: HQ Allocation Clearing (HQ GL 9999)

Save templates and use them repeatedly.

#Period-End Entries

At period-end, you may create:

Accrual entries - Record unbilled expenses or unpaid revenues

Deferral entries - Spread prepaid expenses to future periods

Reclassification entries - Move balances between accounts

Tax entries - Estimate tax liability

Create these after other transactions post but before closing the period.

#Searching Your Entries

Find created entries:

1. Go to General Ledger > Journal Entries
2. Filter by:
   • Date range
   • Description keywords
   • GL account affected
   • Posted/Unposted status
   • Custom properties
3. Sort and review

Saved searches help for recurring review tasks.

#Validation Rules

Before posting, entries are validated:

• Balances - Debits must equal credits
• Accounts exist - All GL accounts must be valid
• Period open - Cannot post to closed period
• Amounts entered - Cannot have empty debit/credit
• Required fields - Description, date, entity required

Validation prevents invalid entries from reaching the ledger.

#Related Articles

• Understanding Light's general ledger
• Accounting document types and lifecycle
• Deferred entries (accruals and deferrals)
• Immutable ledger and audit trail