Working with Journal Entries

A journal entry records debits and credits directly in your QuickBooks Online general ledger. The sections below explain when nonprofits use journal entries for grants, and how GrantLink treats them after a sync.

What are journal entries?

A journal entry posts debits and credits directly to the accounts you choose, without a bill, check, or other form. The total debits must equal the total credits.

Common uses include:

• Adjusting entries at the end of a period
• Reclassifications that move amounts between accounts
• Accruals that record an expense before you pay it
• Allocations that spread a shared cost

Journal entries and grants

When to use a journal entry

1. To correct an expense in the books when the original account or grant tag in QuickBooks Online was wrong.
2. To record indirect costs under an approved rate.
3. To allocate shared costs across grants.
4. To record period-end grant adjustments that your CPA has reviewed and approved.

Don't post a journal entry in QuickBooks Online only to change an allocation in GrantLink. If the books are correct but the GrantLink allocation is wrong, fix the allocation in GrantLink. If the amount, account, or tag in QuickBooks Online is wrong, fix QuickBooks Online and sync again.

Creating a grant-related journal entry

In QuickBooks Online:

1. Select + Create, then Journal entry.
2. Enter the date and a memo.
3. On each line, choose the account and enter the debit or credit amount. If you track Classes, choose a Class on the lines that belong to a Class under your accounting policy. Add a description.
4. Check that total debits equal total credits.
5. Select Save and close or Save and new.

Example: moving an expense between grants

To move $500 of office supplies from Grant A to Grant B, post this entry.

Account	Debit	Credit	Class
Office Supplies	$500		Grant B
Office Supplies		$500	Grant A

How GrantLink handles journal entries

GrantLink syncs journal entries with your other QuickBooks Online transactions, and it treats each line on its own.

1. Journal entries appear in GrantLink after a sync.
2. A line posted to an expense account can allocate to a grant automatically when it matches the grant's Expenses links.
3. A balancing line on an asset, liability, equity, or revenue account isn't treated as a grant expense. Both sides of an entry don't count as actuals.

Revenue recognition entries are different from reclassifications that release donor restrictions. A release moves an amount from net assets with donor restrictions to net assets without donor restrictions under your accounting policy, and it isn't new revenue. Have your CPA approve the accounts, timing, and presentation.

Viewing journal entries in GrantLink

1. Open the organization's Ledger, or the grant's Transactions > Allocations page.
2. Filter to the journal entry, or open its detail.
3. Check each line for eligibility, allocation status, and exceptions.

Best practices

1. Add a memo to every entry that explains why you made it.
2. Tag lines with a Class according to your written policy. Don't add a grant Class to every balancing line.
3. Date each entry in the correct period.
4. Keep the support in QuickBooks Online or in the grant's Documents section in GrantLink.

Common scenarios

Applying indirect costs

Before you record indirect or shared costs, confirm the award's approved rate, its allocation base, and its method. An allocation entry should spread costs that are already in the ledger. It must not create a second expense or revenue that has no support. Have your CPA approve the accounts and the credit side, such as an indirect cost pool or a contra-expense account. Analyze any receivable or revenue recognition separately.

Sharing a cost across grants

Use an allocation method that is documented, applied consistently, and allowed under each award, with a credit side that your CPA approves. For example, an entry that splits a $3,000 program expense 40%, 40%, and 20% across three grants could look like this.

Account	Debit	Credit	Class
Program Expense	$1,200		Grant A
Program Expense	$1,200		Grant B
Program Expense	$600		Grant C
Program Expense		$3,000	(original Class)

Troubleshooting

A journal entry doesn't appear in GrantLink

• Check that the entry date falls within the period GrantLink syncs.
• Check that the entry was saved and wasn't voided.
• Run a manual sync with Sync now.

A journal entry line is on the wrong grant

• If the Class or other tag in QuickBooks Online is wrong, edit the journal entry in QuickBooks Online and fix the tag on that line.
• Wait for the next sync, or run Sync now.
• If QuickBooks Online is correct, fix the allocation in GrantLink instead.

How GrantLink supports this today

QuickBooks Online stays your accounting record. Syncing, allocating, and coding budget lines in GrantLink don't change QuickBooks Online. When journal entries are available, GrantLink can post allocation journal entries and their reversals if your organization allows them in Settings > QuickBooks > Permissions and a user reviews and applies each entry. GrantLink is making QuickBooks changes available in stages, so journal entries may not be available yet. GrantLink can't post indirect cost journal entries, so record those in QuickBooks Online yourself. The default Read-only reporting mode never changes QuickBooks Online. Get professional review for journal entries and accounting policy decisions.

Sources

• Intuit: Create journal entries in QuickBooks Online: the journal entry steps and the rule that debits equal credits.
• FASB: ASU 2016-14: releases from donor restrictions are reclassifications, not new revenue.