How to write a journal entry
R – Review or reflect on it. Close your eyes. Take three deep breaths. Focus. You can start with “I feel…” or “I want…” or “I think…” or “Today….” or “Right now…” or “In this moment…”
I – Investigate your thoughts and feelings. Start writing and keep writing. Follow the pen/keyboard. If you get stuck or run out of juice, close your eyes and re-center yourself. Re-read what you’ve already written and continue writing.
T – Time yourself. Write for 5-15 minutes. Write the start time and the projected end time at the top of the page. If you have an alarm/timer on your PDA or cell phone, set it.
E – Exit smart by re-reading what you’ve written and reflecting on it in a sentence or two: “As I read this, I notice—” or “I’m aware of—” or “I feel—”. Note any action steps to take.
In summary….it’s easy to W.R.I.T.E. !
W hat topic?
R eview/reflect
I nvestigate
T ime yourself
E xit smart
Eight Suggestions for New Journal Writers
1. Protect your privacy.
Store your journal in its own special place so that the temptation for others to read is diminished. Ask for agreement with your housemates that your journal is private. Reserve the first page of any new journal for your name and phone number or e-mail address, along with a notice: This is my personal journal. Please do not read it without my permission. If none of that would stop whoever might read your journal, get a shredder. Find a creative way to protect your privacy, such as a new gmail or yahoo account, freshly passworded, from which to write yourself at that address. Or keep your journal on a flash drive. Make your privacy an intentional act.
2. Start with an entrance meditation.
Nearly every journal technique benefits from a few minutes of focused quieting. Use visualization, soft music, candles, deep breathing, stretches, whatever works for you.
3. Date every entry.
If you only establish one habit in your journal, let it be this one! Dating every entry allows you to chronologically reconstruct your journal by date. It also lets you hear the silence between your entries.
4. Keep (and re-read) what you write.
Often the writes that feel like throw-aways contain the seeds for future insight. Keep it, re-read it later, and surprise yourself with how much you knew that you didn’t know you knew!
6. Start writing; keep writing.
Start with the present moment (“What’s going on?”) Or start with a feeling (“I’m so mad I could bust!”) Or start with a story (“Today the weirdest thing happened….”) Once you’ve started, don’t go back to edit or rewrite. And don’t think too much. Let it flow.
7. Tell yourself the truth.
Your own truth is not your enemy. Don’t try to talk yourself out of knowing what you know or feeling what you feel. Give yourself permission to tell the truth. Also give yourself permission to pace yourself. If the truth seems too bright or harsh, then slow it down.
8. Write naturally.
If there is one inviolate rule of journal writing, it is that there simply are no rules! Do what works. Don’t worry about what you’re not doing. Give yourself permission. Let yourself enjoy the process!
What Is Included in a Journal Entry?
- A reference number or also known as the journal entry number, which is unique for every transaction.
- The date of the journal entry.
- The account column, where you put the names of the accounts that have changed.
- Two separate columns for debit and credit. Here you will put the amounts that will be credited and debited. Again, it’s important to remember that they must be equal in the end. If you’re using accounting software, it won’t let you post the journal entry unless the amounts match. However, if you’re using manual apps like Sheets or Excel, always triple check the balance.
- Lastly,the journal entry explanation. This needs to be a brief but accurate description of the journal entry. You may need to refer back to it in the future, so be as clear as possible.
What are the Most Common Types of Journals?
Businesses are diverse – in size, service, ownership. That’s why there are different types of journals, based on the company you run. Mainly, however, we divide them into two categories: general and special.
For big industries like trading or manufacturing, other journals, called special journals are necessary. Their purpose is to group and record transactions of a specific type. These types depend on the nature of the business. Usually, though, special journals record the most recurring transactions within a company.
Most Common Journal Entries for a Small Business
As you might’ve guessed, a journal entry for sales of goods, is created whenever your business sells some manufactured goods. Since these are self-descriptive enough, let’s move on to some more complex accounting journal entries.
What Are the Different Types of Journal Entries?
Compound Entries
When transactions affect more than two accounts, we make compound entries. These are common when the recordings are related in nature or happen during the same day.
Assets increase when debited, so Equipment will be debited for 800,000. Expenses decrease when credited, so Cash will be credited for $500. Liabilities increase when credited, so Accounts Payable will also be credited for $500.
Adjusting Entries
Adjusting entries are used to update previously recorded journal entries. They ensure that those recordings line up to the correct accounting periods. This does not mean that those transactions are deleted or erased, though. Adjusting entries are new transactions that keep the business’ finances up to date.
- Prepaid expenses are payments in cash for assets that haven’t been used yet. Think of insurance. It protects a company from possible losses, like fire or theft, which haven’t happened yet.
- Unearned revenue is cash received before the product or service is provided. Take your yearly gym membership or Spotify subscription – you’re paying in advance for future service.
- Accrued revenue is money earned, but not collected. If you take a loan, the interest rate income from the loan will be recorded as an accrued revenue.
- Accrued expenses are expenses made, but not paid. An example would be not paying your workers their salary until the end of the month.
How to prepare journal entries for your small business
If you’re using accounting software, the majority of journal entries are made by your accounting software, so you’ll only need to enter month-end adjusting entries, such as when reconciling your bank accounts, or when entering accruals for payroll and other expenses.
Let’s use the following as an example. You visit your local office supply store and purchase paper and pens for your business. The total purchase is $150.00. Here’s how you would prepare your journal entry.
Step 1: Identify the accounts that will be affected
Before you can write and post a journal entry, you’ll need to determine which accounts in your general ledger will be affected by your journal entry. In this example, your office supplies account and your cash account are the accounts that will be affected.
Tips for identifying the right accounts:
Step 2: Determine your account type
If you spent $150 at the store, you’ll be creating an expense for your office supplies account while reducing the amount of cash in your bank account. You’ll need to apply standard accounting rules to each account.
Tips for identifying the account type:
Step 3: Prepare your journal entry
Tips for preparing a journal entry:
Example of a journal entry
Notice that the date is entered for both lines. It’s journal entry No. 1, the account number is included after the account name, and the office supplies account has been debited and the cash account credited.
The best accounting software for documenting journal entries
When you’re using accounting software, journal entries are completed every time you process accounts payable, calculate accounting cost, or perform any other basic bookkeeping transactions, leaving you to record only items such as month-end adjusting entries.
1. AccountEdge Pro
AccountEdge Pro is a desktop application that also offers remote connectivity. AccountEdge Pro is a good fit for small and growing businesses that are looking for an accounting application that can grow along with them.
AccountEdge Pro does not include a bank feed, but you can download your bank statement for reconciliation within the application. The Accounts entry screen in AccountEdge Pro makes it easy for you to record journal entries, with an option available to make a journal entry recurring, as well as the ability to reverse a previous month’s journal entry for things such as accruals.
2. Sage 50cloud Accounting
You can easily create journal entries in Sage 50cloud Accounting by going to the General Journal Entry screen, where you can enter the details of your transaction, including a unique transaction code and description of the journal entry.
3. QuickBooks Online
When you do need to create a journal entry, you can do so easily, with QuickBooks Online automatically assigning a reference number to all journal entries. A description field and a memo field are available to detail what the entry is for.
QuickBooks Online also lets you delete a previously posted journal entry, but in order to maintain an audit trail, any journal entry posted in error should be reversed, not deleted.
QuickBooks Online offers four regular plans: Simple Start, Essentials, Plus, and Advanced, as well as a Self-Employed plan available for freelancers, with pricing starting at $10 per month for the first three months.
Source:
https://journaltherapy.com/journal-cafe-3/journal-course/
https://www.deskera.com/blog/journal-entries/
https://www.fool.com/the-ascent/small-business/accounting/articles/journal-entry/
Journal Entries Explained – Full Guide With Examples
Depreciation Journal Entry
Depreciation Journal Entry is the journal entry passed to record the reduction in the value of the fixed assets due to normal wear and tear, normal usage or technological changes, etc., where the depreciation account will be debited, and the respective fixed asset account will be credited. The main objective of a journal entry for depreciation expense is to abide by the matching principle.
The journal entry for depreciation refers to a debit entry to the depreciation expense account in the income statement and a credit journal entry to the accumulated depreciation account in the balance sheet. In each accounting period, a predetermined portion of the capitalized cost Capitalized Cost Capitalization cost is an expense to acquire an asset that the company will use for their business; such costs are recorded in the company’s balance sheet at the year-end. These costs are not deducted from the revenue but are depreciated or amortized over time. read more of existing fixed assets, such as equipment, building, vehicle, etc., is transferred from the fixed assets in the balance sheet to depreciation expense in the income statement so that the cost can be matched with the corresponding revenue generated by utilizing these assets.
- The “Accumulated Depreciation” account is captured under the asset heading of Property Plant and Equipment (PP&E ). This account is also referred to as a contra asset accountA Contra Asset AccountA contra asset account is an asset account with a credit balance related to one of the assets with a debit balance. When we add the balances of these two assets, we will get the net book value or carrying value of the assets having a debit balance.read more since it is an asset account with a credit balance. Given that the accumulated depreciation accountAccumulated Depreciation AccountThe accumulated depreciation of an asset is the amount of cumulative depreciation charged on the asset from its purchase date until the reporting date. It is a contra-account, the difference between the asset’s purchase price and its carrying value on the balance sheet.read more is a part of the balance sheet, its outstanding balance amount is carried over to the next accounting period. The credit balanceCredit BalanceCredit Balance is the capital amount that a company owes to its customers & it is reflected on the right side of the General Ledger Account. Usually, Liability accounts, Revenue accounts, Equity Accounts, Contra-Expense & Contra-Asset accounts tend to have the credit balance.read more of the accumulated depreciation account eventually becomes as large as the cost of the assets that are being depreciated.
- The “Depreciation Expense” account is a part of the income statementIncome StatementThe income statement is one of the company’s financial reports that summarizes all of the company’s revenues and expenses over time in order to determine the company’s profit or loss and measure its business activity over time based on user requirements.read more , and it is a temporary account. At the end of each accounting period, the balance from the depreciation expense account is moved to the accumulated depreciation account. The depreciation expense account will eventually begin the new accounting periodAccounting PeriodAccounting Period refers to the period in which all financial transactions are recorded and financial statements are prepared. This might be quarterly, semi-annually, or annually, depending on the period for which you want to create the financial statements to be presented to investors so that they can track and compare the company’s overall performance.read more with a zero balance.
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Source: Depreciation Journal Entry (wallstreetmojo.com)
What Is Included in a Journal Entry?
- A reference number or also known as the journal entry number, which is unique for every transaction.
- The date of the journal entry.
- The account column, where you put the names of the accounts that have changed.
- Two separate columns for debit and credit. Here you will put the amounts that will be credited and debited. Again, it’s important to remember that they must be equal in the end. If you’re using accounting software, it won’t let you post the journal entry unless the amounts match. However, if you’re using manual apps like Sheets or Excel, always triple check the balance.
- Lastly,the journal entry explanation. This needs to be a brief but accurate description of the journal entry. You may need to refer back to it in the future, so be as clear as possible.
What are the Most Common Types of Journals?
Businesses are diverse – in size, service, ownership. That’s why there are different types of journals, based on the company you run. Mainly, however, we divide them into two categories: general and special.
For big industries like trading or manufacturing, other journals, called special journals are necessary. Their purpose is to group and record transactions of a specific type. These types depend on the nature of the business. Usually, though, special journals record the most recurring transactions within a company.
Most Common Journal Entries for a Small Business
As you might’ve guessed, a journal entry for sales of goods, is created whenever your business sells some manufactured goods. Since these are self-descriptive enough, let’s move on to some more complex accounting journal entries.
The best accounting software for documenting journal entries
When you’re using accounting software, journal entries are completed every time you process accounts payable, calculate accounting cost, or perform any other basic bookkeeping transactions, leaving you to record only items such as month-end adjusting entries.
1. AccountEdge Pro
AccountEdge Pro is a desktop application that also offers remote connectivity. AccountEdge Pro is a good fit for small and growing businesses that are looking for an accounting application that can grow along with them.
AccountEdge Pro does not include a bank feed, but you can download your bank statement for reconciliation within the application. The Accounts entry screen in AccountEdge Pro makes it easy for you to record journal entries, with an option available to make a journal entry recurring, as well as the ability to reverse a previous month’s journal entry for things such as accruals.
2. Sage 50cloud Accounting
You can easily create journal entries in Sage 50cloud Accounting by going to the General Journal Entry screen, where you can enter the details of your transaction, including a unique transaction code and description of the journal entry.
3. QuickBooks Online
When you do need to create a journal entry, you can do so easily, with QuickBooks Online automatically assigning a reference number to all journal entries. A description field and a memo field are available to detail what the entry is for.
QuickBooks Online also lets you delete a previously posted journal entry, but in order to maintain an audit trail, any journal entry posted in error should be reversed, not deleted.
QuickBooks Online offers four regular plans: Simple Start, Essentials, Plus, and Advanced, as well as a Self-Employed plan available for freelancers, with pricing starting at $10 per month for the first three months.
Resource:
https://www.wallstreetmojo.com/depreciation-journal-entry/
https://www.deskera.com/blog/journal-entries/
https://www.fool.com/the-ascent/small-business/accounting/articles/journal-entry/