Every business industry is built on some investments and planning. In order to observe its growth of it, we like to record every investment in the business. It needs to be updated every limited period to observe the financial growth of the business. For this, we need to make journal entries on every single matter related to money. In this article, I am going to discuss how to make journal entries in Excel. I hope it will be helpful for every business analyst.
What Is Journal?
A journal is a thorough account that documents all of a company’s financial activities. It is used for account reconciliation in the future and for the transfer of data to other official accounting records, including the general ledger.
How to Make Journal Entries in Excel: Easy Steps
In order to maintain objective records, journaling is crucial. It also enables quick reviews and records transfers later on in the accounting process. Here, I am going to discuss the whole procedure in 3 steps on how to make journal entries.
- Formation of an Initial Balance Sheet
- Generate Financial Statements for a certain period
- Make entries in the journal
1. Formation of an Initial Balance Sheet
At the beginning of the journal entries, we need to make an initial balance sheet. The steps are described in the below section.
- Take into account every expense at the start of the business and organize them in a perfect way. In my case, I have taken a dataset related to the starting condition of the production business. I have organized the data in Particulars, Credit/Debit, Debit, and Credit columns.
- Next, input the following formula to have the debit summation.
Here, the SUM function has returned the output of the summation of cells D5:D12.
- Press ENTER to have the summation.
- Use Fill Handle to autofill the right cell to have the credit total.
2. Generate Financial Statements for a Certain Period
In order to make journal entries, we need to have some financial activities enlisted. For this, we can consider a certain period to have some financial statements. With that, we can generate financial statements.
- Enlist the financial activities for a certain period. Here, I enlisted the financial activities of a company in the month of July 2022.
- Rearrange the financial activities into a balance sheet mentioning debit and credit.
3. Finalize Journal Entries in Excel
Finally, make entries the financial data in the journal. This updated journal will help us to analyze the overall present condition of the company and plan to march forward.
- Consider every financial statement into account considering both the initial balance sheet and the newly created balance sheet.
- . Calculate every financial statement with these two sheets.
I input the following formula to have the present Machines condition.
Here, I added the total value of the machines.
- Press ENTER to have the result.
For Inventory, I just mentioned it from cell D6 of the worksheet named Dataset.
- Make entries of every financial statement in the journal following the above procedure.
- After that, input the following formula to have the debit summation.
Here, the SUM function has returned the output of the summation of cells D5:D16.
- Hit the ENTER button to have the debit total.
- AutoFill the right cell to have the credit total.
As both debit total and credit total are equal, we can certainly say that our sheet is balanced.
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In the end, I like to add that I have tried to explain step-by-step procedures of how to make journal entries in Excel. It will be a matter of great pleasure for me if this article could help any Excel user even a little. For any further queries, comment below.