Entering Your Accounting Data Manually into your General Ledger

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Some accounting packages and software are integrated with different modules, such as accounts payable and accounts receivable. In most cases, you should be able to record most of your cheque (accounts payable and bank cheque) transactions as well as your sales (accounts receivable and deposit) transactions. In any monthly accounting process, besides these screen oriented and often visual modules, you will have to make adjusting journal entries on occasion.

When I prepare year end financial statements for my clients, I usually receive the information in two different ways:

  • in a shoebox – where I get all of the information and have to input all of the transactions myself, or
  • an unadjusted general ledger – where the client has recorded the information already into an accounting package
  • It is for these two reasons that most of my entries are adjusting journal entries. I do not use other modules in the preparation of annual financial statements. My software does have integrated A/R and A/P modules though. If my client uses, for instance, an accounts payable module – and I adjust accounts payable, I would naturally provide details of what I adjusted so an entry can be made to the correct vendor, proper invoice, and G/L codes. One has to do that! Anyway …

    In my accounting software of my choice, I am allowed to record the following type of information for each entry when I am inputting transactions. I can hit the “F3” button and put a “ditto” mark in any field to bypass it for recurring and similar data input entry, to reduce the number of times I have to hit [ENTER] to continue through the cycle. I also have a similar entry for “Future” transactions. I can enter a whole bunch of source documents in random order, and then retrieve them by cut-off date into the “Current” transactions in the order that I want. It’s great that way.

    Transactions - Add - Entry

    1) The G/L Account Number

    This is where I input the General Ledger Account number. Even if I have divisions, branches, or sub-accounts and it appears that my numbers should have a dash in it, like 4000-1, I ignore the dash and would just input 40001

    2) The date

    The date is entered in MM DD YY format, and the program is Y2K compliant, so YY = 05 would mean 2005, not 1905.

    3) Source Code

    For “Source Code” I have a variety of different codes I like to use all the time. I know them ‘Off-By-HART’ so, when I browse through the general ledger, I know the exact source. I can also print reports sorted by Source Code, so it helps to keep things consistent. My usual ones are:

    CK – for all cheques entered, including bank statement items
    CQ – if there are multiple bank accounts, I would use CH (cheque) next, then CA (chequing account)
    AP – accounts payable
    CR – cash receipts
    DB – deposit book
    CD – cash disbursements
    PC – Petty cash
    JE – journal entry … / if I use this, my Reference is MM-## e.g. 08-01, 08-02, 08-03, 09-01, 09-02 etc.
    YE – for year end journal entries only … / if I use this, I use HBSMC-01, HBSMC-02, HBSMC-03 (so if clients get a final G/L copy of the year end, they see my business name)
    DM – debit memo
    CM – credit memo
    SJ – sales journal
    AR – accounts receivable
    OS – outstanding …/ i use for outstanding cheques and deposits so I can print a list
    US – U.S.D. account (don’t forget .. I-AM-Canadian!)

    My program has special codes that I also use all of the time:

    99 – this is for recurring entries – When I do an update, whether to advance the program into another month or a year, all journal entries will be repeated until I stop the 99 code, or delete the entry.

    RECURRING JOURNAL ENTRY – CODE “99”

    DEBIT

    CREDIT

    Last Month – (99) DR. Insurance (1/12)

    350.00

     
      CR. Prepaid Expenses (1/12- insurance)  

    350.00

    This Month – (99) DR. Insurance (1/12)

    350.00

     
      CR. Prepaid Expenses (1/12- insurance)  

    350.00

    Everything stays the same, including the Reference and description. I name each recurring entry unique and usually keep it on a 7-column pad at the top of my monthly accounting files, so I know how it was calculated, and when it expires and should be stopped.

    98 – this source code is used for reversing entries. When an update is made, this code will automatically get renamed to code 97 and the entry will be reversed.

    REVERSING JOURNAL ENTRY – CODE “98”

    DEBIT

    CREDIT

    Last Month – (98) DR. Telephone

    160.00

     
      CR. Accounts Payable  

    160.00

    This Month – (97) DR. Accounts Payable

    160.00

     
      CR. Telephone  

    160.00

    I have in mind an idea for a blog entry about reversing and recurring entries in more detail, so I will leave this topic at that.

    4) Reference

    I like to keep my reference field consistent because I can print reports in numerical entry order, or in “reference” order. So, if I am entering cheques 998, 999, 1000 and 1001 – I would enter it as 0998, 0999, 1000, and 1001 (because any accounting geek will know … 1000 gets sorted before 999, sorting left to right). If I were recording transactions off of bank statements, I would normally just use the reference like 2005/07 and 2005/08 etc … So it also can be sorted in numerical reference (because any accounting geek will know … AUG/2005 gets sorted before JUL/2005, sorting left to right).

    5) Description

    For my description, I am limited to 48 characters in the description field because this program is a Dos program… (that’s right – I said Dos) and is not expandable. My G/L program is Y2K compliant .. in case that is what you were worried about that.

    I get around this by making several entries to the same G/L account to put an adequate amount of description and detail if required. Usually, I enter the source of each working paper at the beginning of each journal entry such as ..

    [ BB-1.1/2 Set-up Accounting Bill / 1800HART.com ]

    Or I might enter the payee of a cheque and description .. e.g. over 2 lines..

    [ Furniture Store / purchase new sofa for office 1/ wall shelf for> ]
    [ >continued> for office 2 / Desk for office 3/ ]

    6) Amount

    For debits I just enter the number. For credits I would enter either – 100.00, or 100.00 – I do not have to enter decimals, as I can enter 10000 and get the same figure if I were to input 100. or 100.0 or even 100.00.

    Take care.
    HART
    1800HART.com

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