Journal entries

A journal is used for recording non-regular transactions, for example, the depreciation of a fixed asset or writing off a bad debt.You can also use journal entries to transfer values from one account to another.

When you create a journal entry you must follow the principles of double-entry bookkeeping; for every debit balance, there must be a corresponding credit balance. This can be made up of several credits as long as the overall total balances. You can also reverse, copy or delete journals.

To post a journal entry

  • 1. Journals > New Journal > complete the following information:
Reference Enter a reference for the journal.
Date Enter the date you want to use for the journal.
Description If required, enter a description for the journal.
Ledger Account * Choose the nominal ledger account you want to use for the first line of the journal.
Details If required, enter details for the journal line.
Debit If this journal line is for a debit value, enter the value here and leave the credit as 0.00.
Credit If this journal line is for a credit value, enter the value here and leave the debit as 0.00.
Include on VAT Return? Choose whether you want to include this journal on a VAT Return.

* These details are compulsory.

If you’ve previously created transaction analysis types, for example, departments or projects, and made them active in the journals area, you also have the option to choose the analysis type when you enter your journal.

  • 2. If you want to attach a file, for example a copy of a receipt, click the attachment button > Upload files > browse to and double-click the file. Find out more about attachments >>
  • 3. Check the total value of credits and debits balance > Save.

How journals affect the VAT Return

Journal entries don’t normally affect the VAT Return and are used to move values from one nominal ledger account to another. However, if required, you can choose to include them on your VAT Return. How it affects the VAT Return depends on how you enter the journal.

Journal type Changes to the VAT return
Journal credit to VAT on sales Increases box 1
Journal debit to VAT on sales Decreases box 1
Journal debit to VAT on purchases Increases box 4
Journal credit to VAT on purchases Decreases box 4
Journal debit to any income account Decreases box 6
Journal credit to any income account Increases box 6
Journal credit to any expenditure account Decreases box 7
Journal debit to any expenditure account Increases box 7
* Journal credit to any other account Increases box 6
* Journal debit to any other account Decreases box 7

* The last two don’t include journals to the following nominal codes:

  • Income
  • Expenditure
  • VAT on sales
  • VAT on purchases
  • VAT on Sales Holding
  • VAT on Purchases Holding
  • VAT liability

If you use the Flat Rate VAT scheme you can’t journal a value to directly affect box 1. Instead, if you need to record a sale for your VAT Return, you can post a journal to an income nominal ledger account which affects box 6 as above, Sage One then calculates the VAT based on your flat rate percentage and includes it in box 1. If you still need to amend the value in box 1, you can manually adjust your VAT Return.

Control accounts and warnings

Control accounts are set up by default and are nominal ledger accounts that Sage One uses when it makes automatic double-entry postings.
For example, when you post sales invoices, the value of the invoice posts automatically to the Trade Debtors category.

If you post a journal entry and select Trade Debtors (1100), the following warning message appears:

Ledger Account Warning
Trade Debtors (1100) Journals posting direct to your Trade Debtors will not be reflected on your aged debtors reports.
Trade Creditors (2100) Journals posting direct to your Trade Creditors will not be reflected on your aged creditors reports.
VAT on Sales (2200) Journals posting to VAT on Sales will only be included on your VAT return if you select the ‘include on VAT return’ option.
VAT on Purchases (2201) Journals posting to VAT on Purchases will only be included on your VAT return if you select the ‘include on VAT return’ option.
VAT Liability (2202) Journals posting to the VAT Liability will not be reflected on your VAT return.
VAT on Sales Holding (2205) Journals posting to the VAT on Sales Holding will not be reflected on your VAT return.
VAT on Purchases Holding (2206) Journals posting to the VAT on Purchases Holding will not be reflected on your VAT return.

The warning messages are for information purposes and you can still save the journal entry.

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