--- title: "How to Write a Journal Entry: Steps & Examples | MCC" description: "How to write a journal entry step by step: debits and credits, the memo, when to use a reversing entry, and two worked examples you can copy." url: "https://mcc-solutionsnj.com/bookkeeping/guides/how-to-write-a-journal-entry" --- Bookkeeping guide · Updated October 12, 2026 # How to Write a Journal Entry Step by Step Most bookkeeping happens through invoices, bills and bank feeds. But some situations need a manual journal entry, such as correcting a misposting or recording depreciation. Done carefully, it is a simple tool. By [Matthew Coleman](/about), MCC Solutions **Quick answer.** Use a manual journal entry for things that have no bill or payment behind them, such as depreciation, moving a transaction between accounts, amortizing prepaid expenses and year-end adjustments. **Example.** You pay $1,200 of rent from the bank. Debit Rent Expense $1,200 and credit Cash $1,200. Total debits equal total credits, so the entry balances, and rent expense goes up while cash goes down. Want this handled for you? Monthly bookkeeping, cleanup and year-end close for small businesses. Start with a free health check of your books. [Free health check](/bookkeeping/health-check)[Get a quote](/bookkeeping/#interest) **Related:** [NJ 1099 contractor rule (ABC test)](/bookkeeping/guides/nj-independent-contractor-rule-abc-test-2026) · [Trial balance explained](/bookkeeping/guides/trial-balance-explained) · [Owner contribution or loan](/bookkeeping/guides/owner-equity-and-capital-contributions) **Free tools:** [Free invoice template](/bookkeeping/free-invoice-generator) · [Mileage deduction calculator](/bookkeeping/mileage-deduction-calculator) [![Intuit ProAdvisor Gold tier badge](/img/credentials/intuit-proadvisor-gold.png)](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77)Gold tier in Intuit's ProAdvisor program. [See my Intuit listing](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77) Keeping your own books? Tallyfinch does invoices, bank import and reports on your computer. [See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software) ## When a journal entry is the right tool Use a manual entry for things that have no bill or payment behind them. Typical cases are depreciation, moving a transaction between accounts, recording prepaid expense amortization, and year-end adjustments. Do not use one to fix something that has a normal route. A wrong category on a bank transaction should usually be fixed on the transaction itself, so the bank match stays intact. ## Step by step First, decide what happened in plain words. For example: the rent for the whole quarter was paid in advance, and one month's worth is now used up. Second, identify the accounts. Prepaid rent decreases, and rent expense increases. Third, set the debit and credit. Rent expense gets the debit because expenses grow with debits. Prepaid rent gets the credit because the asset shrinks. Fourth, enter the date, usually the last day of the month. Fifth, write a clear memo. Finally, save and check the effect on your reports. ## Writing memos that help later A memo like adjustment tells you nothing a year later. Better is something that names the reason, the period and the supporting document, such as October prepaid insurance amortization per policy schedule. Good memos help your CPA and make an audit trail. If someone asks about the entry, you can answer from the record without relying on memory. ## Errors to avoid Posting to the bank account in a manual entry is a frequent error. It changes the book balance without a real bank transaction, so your reconciliation will not match. Bank movements should come from deposits and payments. Another is tagging a customer or vendor incorrectly. If you debit accounts receivable, many programs require a customer name, and a wrong name distorts aging reports. Also avoid entering in a closed period without checking with whoever closed it. ## Review and reverse After posting, run a quick report for the accounts used and make sure the balances moved as expected. Some entries are meant to be temporary, like an accrual at month end. Turn on the reversing option, so the books do not double count when the real bill arrives. Keep a short log of recurring entries, such as monthly depreciation. If your bookkeeper handles this, ask for the schedule once a year. ## A second example: moving a misposted amount Suppose a payment for equipment was coded to repairs. The fix is to debit the equipment asset and credit repairs expense for the same amount, dated in the period you are correcting. Add a memo that says what was wrong and why. Repairs drops, the asset appears on the balance sheet, and the bank balance is untouched because no cash moved in the fix. ## Check your work Before saving, confirm total debits equal total credits, the date falls in an open period, the accounts are the intended ones, and the memo says why in a sentence a stranger could follow. After saving, open the affected account and confirm the balance moved by the amount you expect. Attach the supporting document or note where it lives. ## Common questions **Can I edit a journal entry later?** Usually yes, but be careful in closed periods. A correcting entry with a note is cleaner than rewriting history. **Do journal entries need approval?** In a small business there may be no formal approval, but a second person looking at manual entries is a smart control. **What is a compound journal entry?** One with more than two lines, such as a loan payment split between principal, interest and bank. Total debits must still equal total credits. This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation. Let us handle it [### Monthly bookkeeping Categorizing, reconciling and monthly reports, with cleanup, payroll and NJ filings available. Bookkeeping →](/bookkeeping/) [### QuickBooks Online Monthly bookkeeping, cleanup and reconciliation in QuickBooks Online for New Jersey small businesses. Your account stays in your name. QuickBooks →](/bookkeeping/software/quickbooks-online)[### Xero Bookkeeping and reconciliation in Xero for New Jersey small businesses, including cleanup and moving from spreadsheets or another program. Xero →](/bookkeeping/software/xero) More guides - [Accrued Expenses and Accrued Revenue Explained](/bookkeeping/guides/accrued-expenses-and-revenue-explained) - [Prepaid Expenses and Deferred Revenue Basics](/bookkeeping/guides/prepaid-expenses-and-deferred-revenue) - [Depreciation Basics for Small Business Owners](/bookkeeping/guides/depreciation-basics-for-small-business) - [Accounts Receivable Basics: Track What You're Owed](/bookkeeping/guides/accounts-receivable-management-basics) Free tool - [Bookkeeping health check](/bookkeeping/health-check) [All guides](/bookkeeping/guides) Reach small business owners, freelancers and bookkeepers who read this guide: [advertise here](/advertise#bookkeeping). [![Cover of Bookkeeping Fundamentals (ebook) by Matthew Colt](/img/toolkits/bookkeeping-fundamentals-ebook/cover.webp)](/toolkits/bookkeeping-fundamentals-ebook) From the bookshelf ### Bookkeeping Fundamentals A college-level bookkeeping course, without the tuition. 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