Since you cannot use a Journal Entry to adjust the Account in QuickBooks, you need to post the same debit and credit to the General Ledger that you would have entered on the Journal Entry, but you have to use another transaction type that allows you to adjust one or more Items as well. You will use different forms in different circumstances. As described below.
Adjusting Income Accounts
When you adjust Income, you almost always need to adjust one or more Items. Items are used most often to record detailed sales information on Invoices, Sales Receipts and Credit Memos. As a result, Income type accounts are almost always included in at least one Item on the Item list.
For this example, the accounting professional intends to make the following adjustment to the General Ledger:
Note: The “Materials Income” account is linked to the “Counters” Item (a Non‐Inventory Part Item).
One Time Setup Steps
To adjust accounts by both Item and account, you need to add two new Accounts, two new Items and one new Customer as shown below:
Step 1. Create an Other Current Asset Account called Adjustment Clearing.
Step 2. Create an Other Charge Item called Adjustment Clearing and link this Item to the
Adjustment Clearing Account you created in Step 1 above.
Step 3. Create a Bank Type Account called Journal Entries.
Step 4. Create an Other Charge Item called Journal Entries that you link to the Journal Entries Bank Account.
Step 5. Create a new Customer called “Adjustment.”
Adjusting Income Accounts by both Account and Item
Follow these steps to make needed adjustments:
Step 1. To adjust the Materials Income account and the “Counter” Sales Item, start by creating a zero dollar Sales Receipt transaction as shown below.
Step 2. Save the Sales Receipt. Then, with the Sales Receipt displayed, press CTRL+Y to create a Transaction Journal to confirm the correct GL postings and to retain a copy of the adjustment for your files.
Step 3. Create a Journal Entry as shown below to clear the balance in the Adjustment Clearing Account and to adjust other GL Accounts that are not linked to Items.
The report below shows the total journal entry (both Sales Receipt and Journal Entry transactions) for adjustment number 2019‐118.
In Part 2 we will look at 'Adjusting Costs of Goods Sold and Expense Accounts by both Account and Item' , and 'Adjusting Sales Tax Payable by Sales Tax Item'.