Creating Manual Journal Entries

Manual journal entries allow you to record adjustments, accruals, and corrections directly in the GL. This article explains how to create and post journal entries.

# When to Use Journal Entries

Create manual journal entries for:

Adjustments - Fix errors in posting or accounts

Accruals - Record expenses incurred but not yet billed (e.g., rent accrual)

Deferrals - Spread expenses over future periods (e.g., insurance prepayment)

Corrections - Reverse and correct prior entries

Consolidation - Eliminate intercompany entries

Custom entries - Any GL transaction not handled by AP/AR/Payments

Bank reconciliation adjustments - Small differences between bank and ledger amounts (e.g., rounding, fees)

Tip: If you need to create a journal entry to resolve a bank reconciliation discrepancy (such as a small amount difference between the bank transaction and your ledger), you can use the Journal entry option directly within bank reconciliation. This creates and matches the journal entry in one step, saving you from having to manually create the JE first and then return to match it. See Resolving Discrepancies for more details.

# Creating a Simple Journal Entry

To create a basic journal entry:

1. Go to Accounting → Journal entries
2. Click + Create journal entry
3. Enter details:
   • Description - What is this entry for
   • Posting Date - When to post to GL
   • Company Entity - Which entity (for multi-entity companies)
   • Currency - Currency of the entry (if multi-currency)
4. Add lines:
   • Click Add Line
   • Select GL Account
   • Enter Debit or Credit amount
   • Add Description (optional)
   • Repeat for each account
5. System validates that debits = credits
6. Click Post

The entry is now posted to the GL.

# Entry Structure

A journal entry consists of:

Header:

• Description (optional) - Describes what the entry is for
• Posting date (required) - When it posts
• Company entity (required) - Which entity
• Currency (required)
• Custom properties (optional) - Department, project, etc.

Lines:

• GL Account (required)
• Debit amount (optional) - If account is being increased
• Credit amount (optional) - If account is being decreased
• Description (optional)
• Custom properties per line (optional)

Each entry must have at least 2 lines, and debits must equal credits.

# Double-Entry Bookkeeping

All entries use double-entry bookkeeping:

Example: Accrue rent expense

• Debit: Rent Expense (5000) - $1,000
• Credit: Accrued Rent Payable (2500) - $1,000

Both sides must balance. This ensures the accounting equation remains true.

# Multi-Line Entries

Create entries with many lines:

1. Add lines one at a time
2. View running total of debits and credits
3. Continue adding until balanced
4. System shows error if not balanced

Example: Month-end allocation of shared expense to departments

Debit: Department A Expense 40% - $4,000
Debit: Department B Expense 30% - $3,000
Debit: Department C Expense 30% - $3,000
Credit: Shared Expense Clearing - $10,000

# Reversing Entries

Create a self-reversing journal entry by using the same GL account on both the debit and credit sides, then setting a release schedule on one of the lines to automatically reverse the entry in a future period.

To create a reversing entry:

1. Go to Accounting → Journal entries
2. Click + Create journal entry
3. Add two lines using the same GL account — one as a debit and one as a credit
4. On the line you want to reverse, set the Release schedule and choose a date in the next month
5. Post the entry

Light will automatically create the reversing entry on the scheduled date.

Example — Accrue January consulting fees and reverse in February:

Line 1: Account 620100 (Consulting Expense) — Debit $5,000
Line 2: Account 620100 (Consulting Expense) — Credit $5,000  |  Release schedule: Feb 1 (the release will hit Accrued expenses on this line)

When posted, the $5,000 accrual hits the books immediately. On February 1, Light automatically posts the reversal:

Line 1: Account 210300 (Accrued Expenses)   — Debit $5,000
Line 2: Account 620100 (Consulting Expense) — Credit $5,000

This is useful for month-end accruals that need to reverse at the start of the next period.

# Multi-Entity Entries

For multi-entity companies, journal entries can post across entities using the Intercompany tab.

Same entity entry:

• All lines post to the same company entity's GL

Intercompany entry:

• Open a journal entry and select the Intercompany tab
• Add lines that post to different entities
• Light creates the corresponding payable/receivable between entities
• Consolidated reporting automatically eliminates intercompany amounts

# FX and Multi-Currency

For entries in foreign currencies:

1. Select the currency (EUR, GBP, JPY, etc.)
2. Enter amounts in that currency
3. Specify posting date for FX rate
4. Light converts to local and group currencies
5. Stores all three amounts in GL

When multi-entity, each entity can have different local currencies.

# Tax-Related Entries

Some entries involve tax. For example:

Sales tax entry:

• Debit: Sales Tax Expense - $1,000
• Credit: Sales Tax Payable - $1,000

VAT entry:

• Debit: VAT Receivable - $5,000
• Credit: VAT Expense - $5,000

GL accounts typically have a tax designation for proper reporting.

# Workflow Approval for Entries

Journal entries can require four-eyes approval before they post. To turn this on, go to Settings → Workflows and set up (and publish) a Journal entry workflow — you can add approval steps as well as automatic actions like posting the entry or resetting it back to draft.

Once a Journal entry workflow is published:

1. Entry is created in DRAFT status as usual
2. Instead of Post, the button reads Submit for approval
3. Clicking it moves the entry to Pending approval status (shown as an orange Pending approval badge, and filterable by that status in the journal entries list). While pending, the entry is read-only.
4. The designated approver sees the request in their user tasks inbox, where they can review the entry's details and Approve or Reject it directly
5. If approved, the entry posts automatically to the GL
6. If rejected, it returns to DRAFT so you can edit and resubmit

If no Journal entry approval workflow is published, entries post immediately when you click Post, as described elsewhere in this article.

# Batch Journal Entries

Create multiple entries at once:

1. Go to Accounting → Journal entries
2. Click Import Batch
3. Click Download template to get a company-specific CSV that includes your custom properties
4. Fill in the template using friendly display names (e.g., "Cost Center" instead of "cost_center")
5. Upload your CSV file
6. System validates format
7. Creates all entries in DRAFT status
8. Review before posting

The import template is dynamic and includes all your active custom properties. You can use display names for columns, values, and accrual templates—internal names and UUIDs also work for backward compatibility.

For detailed column specifications, see Data Import and Migration Tools.

# Editing Entries

If an entry is still in DRAFT:

1. Open the entry
2. Edit any fields or lines
3. Add or remove lines
4. Click Save (not Post yet)

Once posted, you cannot edit directly. Instead:

1. Create a reversing entry
2. Create a new correcting entry
3. Or modify (see document lifecycle article)

# Approving and Posting

Once an entry is ready:

1. Click Post (or Submit for approval if a journal entry approval workflow is published — see Workflow Approval for Entries above)
2. If an approval workflow is active:
   • The entry is submitted for approval and moves to Pending approval
   • Once approved, it posts automatically
   • If rejected, it returns to draft
3. Entry posts to GL, becomes immutable

Posting is the point of no return—the entry is now in the permanent GL.

# Common Entry Templates

Accrual template:

Description: Monthly rent accrual - [Month]
Debit: Rent Expense (5500)
Credit: Accrued Rent (2750)

Depreciation template:

Description: Monthly depreciation - [Asset]
Debit: Depreciation Expense (5600)
Credit: Accumulated Depreciation (1800)

Intercompany allocation (use the Intercompany tab):

Description: Allocate headquarters costs
Debit: Entity A Expense (570000)
Debit: Entity B Expense (570000)
Credit: HQ Allocation Clearing (999900)

# Period-End Entries

At period-end, you may create:

Accrual entries - Record unbilled expenses or unpaid revenues

Deferral entries - Spread prepaid expenses to future periods

Reclassification entries - Move balances between accounts

Tax entries - Estimate tax liability

Create these after other transactions post but before closing the period.

# Searching Your Entries

Find created entries:

1. Go to Accounting → Journal entries
2. Filter by:
   • Date range
   • Description keywords
   • GL account affected
   • Posted/Unposted status
   • Custom properties
3. Sort and review

Saved searches help for recurring review tasks.

# Validation Rules

Before posting, entries are validated:

• Balances - Debits must equal credits
• Accounts exist - All GL accounts must be valid
• Period open - Cannot post to closed period
• Amounts entered - Cannot have empty debit/credit
• Required fields - Company entity and currency required; each line needs a GL account and an amount

Validation prevents invalid entries from reaching the ledger.

# Related Articles

• Understanding Light's general ledger
• Accounting document types and lifecycle
• Deferred entries (accruals and deferrals)
• Immutable ledger and audit trail