Create a reversal journal entry
Create a reversal from a posted journal entry when its general ledger impact must be canceled on a specified later date. QuickStart creates a linked journal entry with the debit and credit amounts reversed and derives its posting period from the reversal transaction date.
A reversal journal entry is the exact opposite of the original journal entry. For example, the original journal entry debits accounts receivable $100 and credits a revenue account $100. The reversal journal entry credits accounts receivable $100 and debits the revenue account $100.
When you create a reversal journal entry, the original journal entry and its reversal are linked. If you delete the original journal entry, its reversal journal entry is automatically deleted.
Before you begin
You need permission to create journal entries and access the original entry. The original journal entry must be approved and posted before its reversal can be submitted. The reversal date must fall in a period where you can post.
To create a reversal journal entry:
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Open Menu.
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Under Accounting, select Journal, and then select Journal entries.
Alternatively, you can search for journal entries using the global search field.
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On the Journal entries page, open the journal entry you want to reverse.
Alternatively, open Record actions for the journal entry in the list and select Reverse.
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Select More actions and then select Reverse.
You are brought to the New journal entry page.
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In the Details section, enter the reversal journal entry purpose or accept the default journal entry purpose.
QuickStart automatically prefixes Reversal to the journal entry purpose.
Note:
When you create a reversal, the journal entry purpose from the original journal entry is carried over. However, updates to the Journal entry purpose field on the original journal entry won’t be carried over to the reversal journal entry.
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Enter a reversal transaction date. Accept the default transaction date or enter a different date.
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Enter a reversal posting period. Accept the default posting period or enter a different posting period.
The posting period defaults from the reversal transaction date.
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In the Journal entry lines section, under Description, enter a description that explains the context of each journal entry line and helps you identify it.
QuickStart automatically prefixes Reversal to each journal entry line description.
Note:
When you create a reversal, the description from the original journal entry is carried over. However, updates to the Description field on the original journal entry won’t be carried over to the reversal journal entry.
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Select the paperclip icon to select or drop any files related to this journal entry.
Note:
When you create a reversal, the attachments from the original journal entry are carried over. However, if you add or delete attachments in the original journal entry, it won’t be reflected in the reversal journal entry.
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Select Submit to submit the journal entry for approval. If the Journal entry approval process is disabled or auto approval is set up, submitting the journal entry immediately posts it to the general ledger.
Important:
A reversal journal entry can’t be submitted until its original journal entry has been approved and posted.
Note:
When creating a reversal journal entry from a journal entry in Draft or Pending approval status, both the Save as draft and Submit buttons appear. Both buttons save the reversal journal entry as a draft. The Submit button doesn’t appear in view mode unless its original journal entry has been approved and posted.
You can also select Save as draft. A draft can be edited before it is submitted for approval or posted.
After you save or submit the reversal, it opens with its assigned ID and status. Both journal entries contain a link to the related entry.
The following fields in Details are read-only on a reversal:
- Original transaction date shows the original entry’s transaction date.
- Original posting period shows the original entry’s posting period.
- Original journal entry links to the original entry.
The following fields in Journal entry lines are read-only on a reversal:
- Account defaults from the corresponding original line.
- Debit contains the original line’s credit amount.
- Credit contains the original line’s debit amount.
- Person or company defaults from the corresponding original line.