Year End Adjusting Entries

At the end of your fiscal year, your accountant may give you a list of adjusting journal entries to complete.

From the fiscal year drop down menu, select the fiscal year that the entries apply to.

Adjusting entries are done through the general journal.  You can either click the Quick Action Menu and select General Journal, or you can click More on the left navigation panel, click General journal, and click New journal entry.

You can make your entries in the general journal screen as laid out by your accountant.  While there are any number of adjusting journal entries that can be made, a couple of examples are listed below.

Year end inventory

When adjusting year end inventory, quantity is optional.  A positive quantity will increase your inventory and a negative quantity will decrease your inventory.  Do not attempt to use the inventory adjustment screen to do this entry, as the results may not be the same as the accountant has laid out in your entry.

Amortization

Annual amortization is the most common journal entry.  This entry will book your depreciation based on your current capital asset holdings, purchases, and sales.  Note that this entry will not affect the fair market value of your individual capital assets.  Fair market value still needs to be updated on at least an annual basis.

Transfer of a capital asset to a different class

This is a journal entry example that cannot be done through the journal screen.  In this type of entry, your accountant will have a credit to the original class and a debit to a new class.  This entry will change the balances but will not affect the individual capital asset.

In this case, you will need to edit the original purchase transaction, and change the account to the correct class number.  This is what the entry might look like:

Do not do this entry in the general journal.  Instead, go to Purchases, and edit the original transaction you entered.

Change the account to show class 10 instead of class 8.

Re-enter the capital asset information as needed.

Click Save to record the entry.

Once you have completed your journal entries, click Reports and look at your Trial Balance.

Compare your trial balance to your accountant’s trial balance to ensure that your balances match.  Once your numbers match up, you can switch back to your current year to continue your usual transaction entry.

Last updated on July 28, 2020 by FCC AgExpert