 Zero Accounting Software 2023, Adjusting Entry and Reversing Entry Journal Reports. Get ready to become an Accounting Hero with Zero 2023. First, a word from our sponsor. Well, actually these are just items that we picked from the YouTube Shopping Affiliate Program, but that's actually good for you because these aren't things that we're just given to us from some large corporation which we don't even use in exchange for us selling them to you. These are things that we actually researched, purchased and used ourselves. Focusrite Scarlett Solo 3rd Gen USB Interface with Software Suite. I've been using a Focusrite for years for my audio needs before which time I had a USB microphone which plugged directly into the computer, but I think you'll find as I have found if you want to increase the quality of your microphone you will need an interface and the Focusrite is the go-to interface as far as I'm concerned. I've been using this for years now. It works well. It's easy to use. It seems quite durably built because I only do the screen recordings. I only need the one solo interface. However, if you have multiple microphones you need to plug in or if you have other instruments you need to plug in, you can look at a similar model that has more input ports. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com where we have many different courses. You can purchase one at a time or have a subscription model giving you access to all the courses. Courses which are well organized have other resources like Excel files and PDF files to download and no commercials. Here we are in our Custom Zero homepage. Going into the company file we set up in a prior presentation Get Great Guitars. Duplicating some tabs to put reports in like we do every time. Right-click in the tab up top to duplicate it. Right-click in the tab up top again to duplicate it again. Back to the middle tab. Accounting drop-down. We're opening the balance sheet. This is a comparative balance sheet, but if you don't have that one open the standard balance sheet tab into the right accounting drop-down income statement. This is a comparative income statement, but if you don't have that open the standard income statement. Back to the tab to the left. We've been looking at the adjusting and reversing entries. Adjusting entries being those made at the end of the period, typically the month or year in order to make the financial statements correct for the accounting method being used, typically an accrual or tax method for example. We're using an accrual method, the adjusting date being February 28 in our case. So let's just do a quick recap of the adjustments that have been made to some of the accounts on the balance sheet and then we'll generate our adjusting journal entry reports which can be useful when communicating especially if you have a difference between who's doing the adjusting entries and who's doing the normal bookkeeping data input which is often different because sometimes you might have adjustments needed to be made by the tax preparer which is often times different maybe than who is doing the bookkeeping so you need the communication of the adjusting entries that have been made in the system so that you are able to communicate. So we'll generate those reports with journal reports. Now note that the adjusting entries do not typically have cash involved in them because that's generally taken care of with the bank reconciliation as the internal control. Adjusting entries typically have two accounts and they're timing accounts that we deal with balance sheet account and income statement account at least two accounts typically. So for the accounts receivable we had an adjusting entry related to an invoice that was entered after the cutoff in March that we pulled in before the cutoff we made a separate transaction for it a separate account which we were able to group together using the edit layout great tool from zero here so that we could compress them to one account for external reporting purposes. We then did a reversing entry to remove it so we can go back to where we were so we don't have it in there twice for the normal bookkeeping process timing different classic adjusting entry. Inventory, we did an adjustment for the inventory for the same reason because we imagined that we sold a piece of inventory during that process we have a separate account for the inventory account that we made the adjustment to so we didn't mess up the sub ledger tracking inventory on a perpetual basis within the system we reversed it we still have something in the sub ledger here because we had another issue during the normal bookkeeping process but if that wasn't the issue it would reverse back out and you can group those again into one inventory account using the great layout tool that zero has. We've got the prepaid insurance which we paid up front with cash for a year's worth of insurance we lowered it by 11,000 and that one is a permanent difference no reversing entry for it because we're just going to lower it as we consume the insurance policy we made an adjustment to the furniture and fixture the fixed assets and this one is similar to the prepaid insurance but we allocated the cost of the fixed assets according to the depreciation schedules which are often tracked outside of the accounting software at least in the United States due to tax obligations forcing us to track the depreciation schedules on a tax basis and therefore it might be useful just to use the same software to do the tax stuff too again zero has a great formatting tool allowing us to see a full breakout of these items down here or to collapse them to see the book value each time or just to the fixed assets and to allow us without having to add account numbers show the furniture and fixture before the accumulated depreciation even though in alphabetical order within this account category it would be the other way around so really flexible tool there which is quite nice we did an adjustment for the loan payable and this one we were simply breaking out between short term and long term portion of the loan payable so here's the short and long term portion for the loan payable and then we reversed that putting it back into the one account and then we also had you could have an adjusting entry we talked about an adjusting entry related to unearned revenue and that's revenue that we've generated that we have not yet and there's a couple different we haven't yet earned and there's a couple different ways that that might come about depending on the industry that we are in so we could have an adjusting entry related to that we didn't have one in our case here we had an adjusting entry related to the interest payable and accrued expense for interest that incurred that we had not yet that we had not yet recorded so we had to pull that in here we did a reversing entry for that one so it didn't throw people off on the bookkeeping side of things so there's just a quick recap now let's generate our reports and I'll go to the tab to the right right click and duplicate this time let's just open a standard balance sheet so I'm going to hit the drop down and go to the balance sheet standard which I don't have here let's go into the reports I haven't used the standard balance sheet in so long actually let's just open I'll open up the comparative one and then I'll just remove the comparison columns because I want to keep the other formatting that we had in here so I'm going to go back and I'm just going to edit the layout and what I'm going to do is I'm going to collapse some of these items so I'm going to edit the layout and I'm going to say I'm going to remove January I think I can remove these two and then I'll change the date to February so I'm going to say trash that column trash this column and then I'll change the date when I get back there I'm just going to call it a normal balance sheet and then I want to collapse the inventory account to just show inventory so there we have it and then I'm going to collapse the accounts receivable just so we have that one account for accounts receivable I'll leave the fixed assets the way they are I could also collapse the loan payable account so I could just see the loan payable and then that looks good I could collapse long-term liabilities but I'll keep it at that so now let's update it just to show the flexibility of the zero reporting which is a big advantage that zero has it's on its flexibility here so I'm making this as of 228 and so now we've got the cash the accounts receivables on one line item the inventors on one line item even though we had those adjusting accounts in there and we've got the prepaid insurance and then the furniture and fixtures broken out and then the liabilities we have in the line item down here the one line item for the loan payable and then the long-term liabilities very nice alright and then I could send these out let's just export it as a PDF and I'll save it over here and if we're giving this to someone else we could also do the whole Excel thing as well but I won't do that this time just in the interest of time so I'll put this in here so we have that report and then I'm going to go and say let's right click and duplicate another one and do a similar thing for the income statement so I'm going to say drop down and let's just open a normal profit and loss report and this one I think is fairly straight let's hit the drop down let's just do it for the two month period custom date range it's going from January to February 28 and then we've got the income cost of goods sold I don't think we need to do any real fancy stuff for the reporting so we could do comparative income statements for the two months and so on but I'll just generate this one let's say PDF making the P to the D to the F and pulling that on over into our reports over here in our folder so now let's open up a standard trial balance report and this is not one you would often give externally but I'm going to generate it for our internal use and we might use it to communicate with the bookkeepers for example and the adjusting department and the accounting department so I'm going to say this is going to go to reports and let's type in trial balance trial bail and I'll generate this one for February and let's say this is going to be the end of FEB 2023 is what we want to see running it so that's as of the cutoff date and then I will generate that export P to the D to the F and let's pull that bad doggy in here alright so then trial balance I'm going to rename that one because I'm going to make another trial balance and you might want to I'm just going to adjust the names on these I'll call this trial balance for 0228 and then these I don't really need the income statement so I'll just rename it and I just want it to say income statement that's what I mean I don't need the get great guitars stuff and then this one I'm going to rename it and get rid of the get great guitars stuff also on this one it's not doing it stop being stubborn and then we'll do this one for March as well let's do a custom one March the end of the next month so you can see the reversing entries we wouldn't be showing this one externally but for our own internal purposes we might generate another one so we can check our numbers if you know you're trying to tie out with somebody else on the adjusting entries you would want to run the report for both dates to make sure all the reversing entries have been properly put in place as well so I'm going to say let's export this one export P D F PUDF PUDF and that's what it is a PUDF and then I'm going to rename that one and we'll make that a trial balance and this is going to be on 03 31 okay and then let's make another report and let's take a look at our journal reports now this is what we've all been waiting for of course the journal reports to show the transactions we have made let's open up our reports and type in journal report and we want to just see our adjusting entries so we'd like to trim this down to just see the adjusting entries so you got this nice drop down here that says manual journals only I'm going to pick that so that just shows the manual journals I'm going to change the date and we're going to say custom date range the Feb 28 was the cutoff date and Feb 28 so just one day so when we're trying to capture just our adjusting entries then the tools that we have is one they were manual journal entries they were not other kinds of transactions that have debits and credits right we did a manual journal entry two they're all as of the same point in time Feb 28 and three we'd label them as adjusting entries so that we can see that they are clearly adjusting entries now note that that might not we have some other entries that were made down here with manual journal entries that kind of mess up our whole thing so what we can do is clean this up a little bit further by exporting it to Excel if we're going to provide this to someone else and simply delete these last two so that's what I would typically do so this one I'm going to say let's export it to Excel and then I'll drag that into my into my sheet over here and I'm going to then open it I'll just rename it I'll rename it these are are ADJ and reversing entries and then I'll just open that thing up open it up and then here we have it so this is what we have and so I usually go to the tab to the right to see if it fits on a page it does not so we can then landscape it go into our formatting review a note format a page layout I mean page that's what I meant and then we're going to go to the page setup orientation landscape-ified it's been landscape-ified just like my front lawn was landscape-ified so then I'm going to go down and so then I can just delete this last bit so I don't need this was a manual entry that's the last one these two are not I'm going to hit adjusting entries put in my cursor on the 40 down to 52 right click delete get out here and so there's our adjusting entries that we made I'll double click on the tab and call these ADJ entry now I'm going to put the reversing entries next door to this one right next door so they can be close to each other I'm not going to fight or anything so then we're going to say that this is going to be let's do this for March for the reversing entries March 31st oh wait wait March 1st March 1st all the reversing entries happened on March 1st March 1st okay reversing entries so these are less likely to see any reversing entries here or things that are not reversing entries but of course like the adjusting entries we entered them as of a point in time all of them in March we entered them as manual reversing it or manual journal entries and we labeled them reversing entries so we should be able to locate them easily let's just open the Excel file this time and I'll copy and paste the Excel this time into the other Excel so we have them both side by side fighting together to make the accounting work better and then I'm going to go up top and select the whole sheet the triangle right click on it and copy it and then go back on over I'm going to add another sheet over here or in the cursor here or in the whole sheet right click and paste it and then we'll double click down here and call it reverse entry I'll tab to the right layout back to the left doesn't quite fit on a page so page layout orientation landscape so there we have it okay just a quick recap of these now we can see these adjusting entries here this is breaking out the short term and long term portion of the loan we reversed that one short term long term portion breaking out that's the one that we enter and reverse this one here is the depreciation recording the reduction or allocation of the cost of depreciation over the useful life no reversing entry related to the depreciation because it's a permanent difference this one also depreciation no reversing entry this one is the insurance this is prepaid insurance allocating the cost of the insurance in the period that we incurred the insurance no reversing entry related to it because it's a permanent difference then we had the adjustment for the invoice that was entered in March even though we earned the revenue before March before the cutoff in February so we entered the adjusting entry here to pull the revenue back into the proper time frame and that one does have a reversing entry because it's simply a timing difference and then this one was the interest the accrued expense that we wanted to pull back into the current period and that one does did have a reversing entry so that we didn't mess up the accounting department to tie into the amortization table when they're making their entries alright so let's save this one and then I'm going to print this as one file using the cute pdf printer so I go to the printer I have a cute pdf printer it's not just cute I don't even know if it's all that cute really I've seen cuter I've seen cuter but the reason to use it is because when you print it it'll then print it as a pdf file instead of printing to a printer I think it's free you can find it online search for the pdf printer I think it's safe if it's not I've infected my computer and you know spyware is probably tracking my every movement and they're laughing at me but whatever I don't care so anyways here's the two of them on one page let's go ahead and print it print it out and then we'll put that over here and we're going to say this is going to be adjusting and and we already have that adjusting and reversing but it's not an excel file not an ex so let's save it like that and boom shaka laka there we have it so now we've got if I double click on this one that opens up our adjusting and reversing entries so we can provide that from the adjusting department to the accounting department possibly just to explain explain ourselves why is this only have one page to it hold on a second here there should be two pages is that two pages there's two pages there okay so then you might want to to give this to someone else we might want to label our reports possibly numbering them so they can open them in order so I might say that this one maybe I'm going to rename and say that one's number one and this one's number two why am I number two that's just the way it is okay income statement you're not number one income statement you're following up trial balance trial balance is going to be number three ah number three sometimes right click rename trial balance number three and then this trial balance I'll say is number four number four oh my goodness did it again number four and then the adjusting entries are last yes you have to be last adjusting entries that's the way it was it has to just has to be that way and then we're going to right click and then say let's make let's put these into just adjusting entry reports maybe and then we can put these in here because providing the reports to somebody is half the job half the battle we're not fighting anyone but that's what GI Joe says it's half the battle so obviously I copied GI Joe because they're cool but let's go ahead and zip this then we can zip it we can right click and compress and zip it and so there we have it so we can add this to a an email if we needed to do that and then they can open it up and it would be in order and so on