Manually adjust a bank account balance in Xero
You can't post a manual journal to a bank account in Xero. This is to ensure that auditing and reporting on the account is as accurate as possible. However, there are ways you can manually adjust the balance.
If you're unable to correct the underlying transactions, add spend or receive money transactions to adjust the bank balance. Alternatively, you could set the bank account up as a current asset instead.
Add a spend or receive money transaction
When you add a spend or receive money transaction, Xero posts a journal to record the transaction in the bank account.
- Add a spend money or receive money transaction to record the journal side of the entry.
- Mark the transaction as reconciled to create a bank statement line in the bank account.
- Run the Journal Report to view the journals posted.
Set up a suspense or clearing account in your chart of accounts if you have a large number of entries at once, or you want to show the movement in the account over a period of time.
Example 1: sales deposited into a bank account
To account for sales of 100.00 deposited into your bank account, add a receive money transaction for 100.00 coded to the sales account. Then manually mark the account transaction as reconciled.
This will create a journal that debits the bank account 100.00, and credits the sales account 100.00.
Example 2: many lines of coding using a suspense or clearing account
You withdraw 20,000.00 from your bank account for payroll and you want to code them to 200 separate expense accounts, to itemise by employee.
- Set up a suspense or clearing account in your chart of accounts.
- Create a spend money transaction and code it to the suspense or clearing account. This will create a debit to the suspense or clearing account for 20,000.00 and a credit to the bank account for 20,000.00
Add a manual journal to record debits to the employee accounts as required, and a credit to the suspense or clearing account for 20,000.00.
Alternatively you could use a CSV file to import a manual journal with multiple lines.
- If a bank statement line has been imported, reconcile the account transaction, or manually Mark as Reconciled if the bank statement line can't be imported.
Example 3: movement over time
The balance in the bank account has gone up by 788.00 during the month and you want to record the overall movement and summary of income and expenses:
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- Add a receive money transaction for 788.00 and code it to the suspense or clearing account. This will create a debit to the bank account for the overall increase of 788.00 and a credit to the suspense or clearing account.
- Add a manual journal to debit the suspense account for 788.00 and credit the relevant income or expense accounts for each amount. This will clear the suspense account and show the individual account movements over the period.
Set up a bank account as a current asset
If you have a bank account that only has a few transactions, or you want to show the movement in an organisation for a period, you could set the bank account up as a current asset in your chart of accounts, instead of a bank account.
A manual journal can be posted to a current asset account, so this may work for accounts where interest and tax transactions happen once a month or quarter, such as term deposits.