Journal Entries
What a journal is, how to post a journal into FreeAgent, and what the FreeAgent does automatically when you post a journal.
Sometimes, your accountant might tell you to "post a journal entry" or "post a journal" in FreeAgent.
What is a journal?
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.
Here's how to post a journal entry in FreeAgent:
1 From the Accounting menu, choose Journal Entries:
2 Select 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.
3 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).
That's done, but 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 to the suspense account, so that your trial balance will always balance.
You can see here, the first two pairs of entries are complete, but the third is not. There is only one posting on 10th May and a credit entry for £1,000 is needed.
FreeAgent has put in an opposite entry to the suspense account. I'll see this if I go to the trial balance.
To see the entries in the suspense account, go to Show Transactions and choose the suspense account, or click the account's name from the trial balance.
This shows the dates on which you need to finish posting your journal entries. This is important because when you come to file accounts with HMRC or Companies House there must not be a balance on your suspense account.
If you're not sure what the opposite side of the journal should be, you'll need to speak to your accountant, 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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