Record a Reversing Journal Entry
You may have a particular Journal Entry that was entered in one month and needs to be reversed in the following month (a common occurrence for companies with bi-weekly payroll)...or you may simply need to fix a mistake!
1. Create a new Journal Entry
In this example we have a Journal Entry that was created to recognize payroll expense for a partial pay period at the end of September. This entry needs to be reversed in October.
(Remember from your accounting classes, after the accrual is reversed in the following month, the actual expenses for the pay period will be recorded when the period ends.)
2. Reverse the original Journal Entry
- Highlight the Entry that needs to be reversed.
- Go to the Action Menu and select Reversing Entry.
After you select Reversing Entry from the Action Menu you will be prompted to Enter a Post To Date.
2.1. Enter a Post To Date
Enter the Post To Date.
This will be the date the Reversing Entry will be posted to the General Ledger. In this example we need to reverse the entry in the following month since the actual expense will be recorded when the pay period ends. However, if you are using this entry to correct a previous erroneous journal entry then you might need to enter this date in the same period. It would be a safe bet to check with your accountant regarding the timing of these transactions.
Click OK to proceed.
2.2. The Reversing Entry has been created.
Now we can see the original entry and the reversal.
3. The Reversing Entry
The Reversing Entry's Memo field will be auto-populated with "REVERSE:" followed by the Memo that was entered on the original Journal Entry.
Click OK to save and don't forget to Post the entry!