How to correct an entry error.

The 'General Journal Entries' window can be is used to correct an error made in a previous transaction.  

In this example, a company has two GL accounts for phone service.  One GL account for 'local phone' services and another for 'long distance' services.  Only one of the GL accounts was selected to pay the entire phone bill.  As a result an error has occurred.

To begin, Ernie Barlit clicks the 'Accounting' menu bar and selects the 'General Journal Entries' option.  Below is a slide of the accounting menu bar and options available to Ernie.

The next slide illustrates the 'General Journal Entries' window when it first opens.

After the window is open, enter a description for the transaction.  Ernie writes, 'Correction to the phone accounts for February 2001.'   Write a description that best explains the transaction.

Next enter the date.   These two details are shown in the next slide.

Next enter the first GL account entry.  Every transaction has two GL account entries.   

Let's begin with the GL account that was not originally Debited.  This GL account Name is, 'Long Distance calls.'

Begin by entering the GL account Number.  In this case, the GL account Number is, '4410.'  Press the <<Enter>>  key and the GL account Name appears in the middle field that is grey.  

In this slide, the GL account Number and Name appear.

Next enter the Debit amount for the GL account entry.  The amount entered is 48 dollars.   Enter the  amount in the field labelled 'Debit.'  Expense GL account Types can only have a Debit entry.

Below is a slide illustrating the GL account Number, Name and the Debit amount of 48 dollars.

Click the, 'Add this Line' button.  This puts the GL account details into the middle table.  Half the transaction is complete.  Every transaction has two GL account entries.

The second entry is the GL account Name, 'Local Phone service.'  Begin this step by entering the GL account Number in the lower left hand field.

Ernie enters the GL account Number, 4400.  Next, press the <<Enter>> key to continue.

The GL account Name appears in the lower middle field.  

The 'Local Phone service' GL account is shown in this slide.

After the GL account Number and Name are entered, it is time to enter the amount.  The incorrect amount previously entered for the GL account was 48 dollars. 

In this case, the GL accounts are both of the Type, 'Expense' and can only have amounts entered on the debit side.  No credit amount is possible.  To overcome this dilemma, we will make the amount a negative.  

Placing a negative sign is an exception.  The rule is that there must be at least two entries. The other rule is that the debit and credit sides must balance. In this case the two sides equal zero.    Even though an exception of the negative has occurred, no principle was broken.

Ernie enters negative 48 dollars in the Debit column.  The next slide shows the GL account entry.

Click the 'Add this Line' button.  Both GL account entries are entered.

The 'Save this Entries' button becomes active when the 'Variance' field equals zero.  This field confirms that the two sides equal one another. Click the save button to complete the entries.

In this slide, the corrections are made all the GL accounts balance.

A final window pops up asking the user to confirm the entries.  Ernie Barlit clicks the 'Okay' button.

The pop-up window is displayed below in the final slide.

The entry is complete.  It is possible to continue to do entries using the 'General Journal Entries' window.  Simply repeat the steps.

Related topics:

Learn more about GL accounts, read, 'What are GL accounts?'  

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