Sometimes, your accountant might tell you to "post a journal entry" or "post a journal" in FreeAgent.
What do they mean, how do you do that, and what does FreeAgent do automatically when you post a journal?
What is a journal?
No, your accountant doesn't mean they want you to send them a copy of the Wall Street newspaper.
In accounting-speak, a "journal" is how you move an amount from one category to another.
In FreeAgent, you can often move figures between categories by, for example, editing a bill to make it move from one category to another. So you might have posted a bill to Advertising. If you actually want it to appear in Consultancy, you can just edit the bill and change its category to Consultancy. You don't have to post a journal entry in FreeAgent in that situation.
But what happens if, for whatever reason, you can't make the change more easily in FreeAgent?
Then you do need to post journal entries.
When journal entries should not be used
If you're making changes to any of your bank accounts, don't post journal entries. Instead post these changes as manual bank transactions such as payments.
If you're making adjustments to what your customers owe you (debtors), or what you owe your suppliers (creditors), don't post these as journal entries. Instead, post invoices or credit notes for customer accounts, or bills or bill credit notes for supplier accounts.
How to post a journal entry in FreeAgent
From the Accounting menu, choose Journal Entries.
Click the New Journal Entry button.
If you can't see this button, you don't have access to post journals. Your accountant, or whoever set you up to use FreeAgent, will either have to extend your user permissions to full, or do the journal for you.
The New Journal Entry window appears.
Enter the details as guided by your accountant, who should tell you which code and date to use, and whether to post the amount as a debit (plus - so you don't need to put in a sign), or credit (minus - so you need to put an - sign in front of the figure).
All journals have two sides. For every debit entry there must be an equal and opposite credit, and for every credit entry there must be an equal and opposite debit.
If you click Create and Add Another, you can go straight on and create the other side, and FreeAgent will automatically pre-populate the second entry with an opposite amount on the same day.
But what if you don't yet know what the other side of the entry will be?
Automatic second entry in FreeAgent
Whenever you post a journal, FreeAgent automatically posts an opposite entry for you so that your trial balance will always balance.
It puts this to the suspense account.
You can see here, I've posted only one side of a journal, and FreeAgent has put in an opposite entry to the suspense account.
And if I go to the trial balance, you'll see there's a balance on the suspense account.
If you look on the Journal Entries screen, you'll see there'll be one entry to the suspense account for every day that you've posted journals without opposite sides. These suspense entries are posted locked by FreeAgent and cannot be edited.
A balance on your suspense account is something that your accountant will need you to correct.
So you'll need to ask them what the opposite side of the journal should be, and then post that journal entry into FreeAgent.
Once you've posted that journal, the suspense account will clear.
You need to always aim to have the suspense account balance as £nil.
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