1. JOURNAL ENTRY PREPARATION
&
DEBITS VS. CREDITS

2. Training Objective Provide guidance for preparing journal entries
Inform users of the required elements for all journal entries and specific journal entries
Provide contacts who can assist with further questions
The objective of this training is to provide guidance for preparing journal entries, to inform users of the required elements that make up a journal entry, and provide contacts of who can assist with further questions.

3. Journal Entries-Introduction
Journal Entries are a process used to enter transactions directly to the Banner Finance system.
Journal Entry transactions are processed to reclassify, allocate or correct assets, liabilities, revenue and/or expenditures between FOAPALs.
Journal entries can be as simple as processing a single transaction between two FOAPALs.
Journal entries can also be used to process many transactions at one time using the FUPLOAD process.
Journal entries are the process used to enter transactions directly to the Banner system, as opposed to indirectly when you make a payment to a vendor or make a deposit through the Cashier’s office. Journal entry transactions are used to reclassify, allocate or correct assets, liabilities, revenue and expenditures. A journal entry can be a single transaction between two FOAPALs or a journal entry could consist of hundreds of transactions posted at one time using the FUPLOAD process.

4. The WHY: Why Are Journal Entries Important?
Why JEs are important – To Banner Users, To Students at UNC, To Colleagues and coworkers, to UNC as a whole.
JEs must be properly entered to correctly report cash and other assets, liabilities, budget, revenue, expenditures and transfers within each FOAP.
Large dollar value Journal entries, or FUPLOADs that affect many FOAPs, record transactions that can materially affect the accuracy of the University’s financial reporting and decision making abilities.
Journal entries can affect Student related FOAPs such as Student fee and financial aid funds. Errors could financially hurt student organizations.
Departmental financial information must be accurate in order to be relied on for decision making and planning. Journal entries provide the means to maintain accuracy.
Journal entries are important because they are the tool used to keep the University’s financial records accurate, timely and consistent.

5. Journal Entries – What you need to know first
Working knowledge or training related to the Basic Banner Finance and Ursa systems.
Working knowledge of the Banner Chart of Accounts - FOAPAL elements (a quick reminder is on the following screen).
Basic understanding of the University Purchase Card System (Pcard).
Prior to initiating a journal entry, you should know how the Banner finance and URSA systems work and understand the Banner chart of accounts FOAPAL elements and the University Purchase Card the PCARD program.

6. Journal Entries – What you need to know first
Quick FOAPAL review:
F - Fund. Where did the money come from? 5-6 digits.
O - Organization (Org). Who is responsible for the money? 5 digits
A - Account. What kind of transaction is this? 5 digits
P - Program. Why is this transaction occurring and how would other
Universities classify this transaction? 4 Digits.
A - Activity (OPTIONAL) How else can this transaction be classified in
relation to a specific program or capital project? (With the exception to
Foundation, Foundation requires this code.)
L - Location. (Not currently used.) Where does this transaction take
place?
Briefly the FOAPAL elements are made up of the Fund which tells you where the money comes from, the Organization which tells you who is responsible for the money, the account which identifies the kind of transaction taking place, the program which tells why the transaction is occurring and classifies the transaction in the financial statements, and the Activity which helps to further classify the transaction. The location, which is currently not being used at UNC, would identify the physical location where the transaction is taking place.

7. Accrual Basis
Revenue- UNC records revenue when it is earned, which is when the goods or services have been furnished, regardless of when the payment is actually received from the customer
Expense- UNC recognizes expense at the time the goods or services have been received, regardless of when the actual payment is made
The accrual basis of accounting affects the way in which UNC records revenue and expenses. For revenue, UNC must record revenue when it is earned. This is when goods or services have been furnished to the customer, regardless of when the payment is actually received.
UNC recognizes expenses at the time the goods or services have been received, regardless of when the actual payment is made.
The accrual basis of accounting generally does not affect how business managers review their operating financial reports during the academic year; however, questions do arise every year regarding how revenues or expenditures are recorded as the June 30 year-end deadline approaches.
If your department receives cash payments during one fiscal year to be earned during the following fiscal year – please contact your fund accountant for advice. An example of this would be when cash is collected during May of one fiscal year to be earned during a sports camp held during August of the following fiscal year.

8. Types of Journal Entries
Reclassifying or correcting revenue, expenses, assets and/or liabilities
Transferring Available Cash or Budget (contact accountants with questions)
There are two general types of journal entries: Reclassifying or correcting revenue, expenses, assets and/or liabilities and Transfers of Available Cash or Budget.
Entries moving revenue or expense are the most common.

9. Types of Journal Entries – Corrections or Reclassifications
Questions that must be answered and documented before a correcting or reclassification journal entry can be processed:
What caused the transaction to be recorded in the incorrect FOAP?
Why is it appropriate to move the expense to the new FOAP?
If the original entry was made over two months prior to the correction, what caused the delay in correcting the entry?
Only current year transactions can be corrected or reclassified. (If you have one, let your accountant know and this can be discussed.)
There are three questions that need to be addressed in your documentation:
What caused the expense to not be recorded in the correct FOAP?
Why is it appropriate to move the expense to the new FOAP?
If the original entry was made over two months prior, what caused the delay in correcting the entry?
The questions are required to establish an audit trail. In other words if the auditors choose your journal entry for testing we need to know the answer to these questions. You also need to remember that only current year expense or revenue can be moved. Prior year expense or revenue would be moved by transferring cash and /or budget, with prior approval by the University Controller. To insure an accurate University cost model expenses should be recorded in the appropriate FOAP when incurred and revenues should be recorded in the appropriate FOAP when earned.

10. Types of Journal Entries – Transferring Available Cash or Budget
Questions that must be answered and documented before a transfer of available cash or budget journal entry can be processed:
Why is the transfer needed?
What is the business purpose for the transfer?
Who is authorizing the transfer?
The documentation for a transfer of available cash or budget needs to include why the transfer is needed, the business purpose for the transfer and the persons authorizing the transfer. Because transfers change where the money comes from and who is responsible for the money, documentation must be very detailed. Lack of detailed documentation will cause a transfer entry to be denied and returned.

11. Basic Requirements for All Journal Entries
All journal entries MUST answer the following questions:
Why is the journal entry necessary?
Who authorized the journal entry?
How were the journal entry amounts determined?
Which fiscal period does the journal entry effect?
When preparing a journal entry the provided documentation should answer the following questions:
Why is the journal entry necessary? Explain the business purpose for the entry.
Who authorized the journal entry? Provide the proper approvals.
How were the journal entry amounts determined? Provide Banner print screens.

12. Basic Requirements for All Journal Entries
All journal entries require valid documentation:
Journal entry form completely filled out
Backup from Banner
Invoice, statement, or other form of backup
Submit via Xtender
This is an area that we would like to make sure everyone knows what we are looking for in a complete journal entry request. The journal entry form needs to be filled out completely, do not leave information out. Backup from Banner is a crucial piece of “backup”, this proves that the amount that is needing to be moved from one FOAPAL to another really exists, and lastly having the corresponding invoice, statement, or other form of backup is needed.

13. Payroll Entries Payroll Expenses:
Payroll expense reclassifications or corrections are NOT processed using journal entries.
Always use a labor redistribution form.
When reallocating payroll expenses always use a labor redistribution form rather than a journal entry. Because a labor redistribution is a payroll adjustment, all paperwork needs to be sent to the Payroll Office rather than the Accounting Office.

14. T Accounts Debit Credit
Every accounting entry must contain both a debit and a credit
Debits are on the Left
Credits are on the Right
All debits must equal all credits (Be in Balance)
Depending on what type of account you are dealing with, a debit or credit will either increase or decrease the account balance
T Accounts
Debit
Credit $0
A T Account is the backbone of basic accounting. Debits and credits represent the two sides of each transaction in a double entry accounting system. Each accounting entry must contain at least one debit and one credit. Debits are on the left of the T, while credits are on the right. The total debits must equal the total credits. These entries track the transactions into and out of accounts. The “T” must be in balance. Depending on what type of account you are dealing with, a debit or credit will either increase or decrease the account balance. The abbreviation for Debit is DR and the abbreviation for Credit is CR.

15. Debits and Credits Increase/Decrease
ACCOUNT DEBIT CREDIT Assets Increases Decreases Liabilities Decreases Increases Income Decreases Increases Expenses Increases Decreases
Depending on which type of account you are using, the debit and credit will either increase or decrease the account balance. While it is good to have a basic understanding of Debits and Credits as you manage your University funds, this understanding will become more important as you continue your training and learn more about processing journal entries, managing cash, updating budgets, etc.

16. Normal Balances for Accounts
Type
Normal Balance
Common Accounts
1xxxx
Asset
Debit
Cash, Accounts Receivable, Inventory, Prepaid Expenses
2xxxx
Liability
Credit
Accounts Payable, Deferred Revenue
5xxxx
Revenue
Sales, Fees, Tuition
6xxxx and 7xxxxx
Expense
Salary and Fringe Benefits, Operating Expenses, Travel, Supplies
This chart details the Normal balances that should be in the various accounts. If, when you check your Banner reports, you see an account balance that is opposite of the “Normal Balance” there may be an issue you should discuss with your fund accountant. For example, if the cash balance in a Fund has a Credit balance, it indicates that the fund has a cash deficit. If the credit balance is not resolved, the Controller will issue a cash deficit notice for the fund and the deficit will need to be addressed. When an account has a balance that is not normal and you need assistance to understand and correct the balance, please contact your fund accountant.

17. Journal Entry Form Journal Entry Location:
Please do not save these forms on your desktop, use the latest forms available for each entry.
Please fill out the form completely in Excel. Provide a contact we can call if we have any questions concerning the journal entry. Provide an authorized approval for each FOAPAL that is Debited. As you enter your debits and credits the form will calculate the total debits and credits to ensure the entry is balanced. If there is an amount in the difference field the entry is not balanced and we will not be able to process the journal entry. If your office uses Activity codes to track expenses, include them in the FOAPAL information. Since the Activity code is optional we will not know to include it unless you tell us to. Provide a brief description of what it is you are trying to accomplish with the journal entry and attach additional documentation that provides the details of the entry. At the minimum we must be able to determine from your documentation why the entry is required and if the entry is appropriate. Keep in mind the required questions. The next few slides are examples of common journal entries and the documentation that would be required.

18. Procurement Card Expense Move
Who needs to sign?
Each debit listed requires a FOAPAL signature.
No backup?
JE will be returned for backup to be included.
This first entry is moving procurement card expenses. We have a contact name and number, an authorized approval, and debits and credits that balance. The explanation tells which expense is being moved.
PCard Expense Reallocation
EXPLANATION IS MANDATORY

19. Banner FGITRND Form Acceptable Backup from Banner (preferred)
When providing documentation it is recommended you show what was posted in Banner. A screen print of FGITRND, a copy of the FIN002 detail report (FIN003) gives the information we need. Looking at the documentation we can see the Staples transaction that needs to be moved. This is simple and straight forward. Now let us say you needed to move more than one procurement card transaction. You would list the additional transactions on the journal entry form, then on the documentation you need to somehow indicate which transactions are being moved. Highlighting the transactions and attaching a calculator tape makes the accountant’s life a whole lot easier so we don’t have to guess which transactions are affected.
Acceptable Backup from Banner (preferred)

20. INSIGHT FIN003 Detail Report
If you are more comfortable using INSIGHT, you can run the FIN002 report and drilldown to the detail in the FIN003 report. This is a copy of the FIN003 report showing the same information.
Acceptable Backup from Banner

21. Partial Expense Move Example
In this entry only part of the expense is being moved. The explanation tells us to move half of the expense.
Partial Expense move to different FOAP
EXPLANATION IS MANDATORY

22. Banner FGITRND Form
The actual expense is $99.42, so the amount being moved should be $49.71 which matches the amount on the journal entry.

23. Memo Documenting Exp Move
Whenever, there is an agreement to share costs the documentation should include something that verifies the agreement. In this case there was a memo that asks that a journal entry be prepared to move half of the expense as agreed. Copies of s between the two parties also work.

24. Internal Sales Crosswalk
This table of revenue and expense codes is used for internal sales. As you can see there is a one to one relationship for every expense code and revenue code. This is the match we are required to maintain in the accounting office. The list of the internal sales expense and the matching internal sales revenue accounts is available on the accounting services website at the following address:
If an internal revenue or expense account is being used, the coinciding account must be used, so needs to also use

25. FUPLOAD Form and Location
One final journal entry form that you may be interested in, is the Finance Upload Form, also known as the FUPLOAD form. The normal journal entry form has room for 14 lines, if you have a journal entry that is longer than 14 lines you can use the FUPLOAD form. By using the FUPLOAD form you can create a journal entry that has up to 250 lines. The documentation and approval requirements are the same as regular journal entries. When you open the form you will see that it is an Excel spreadsheet. If you click on the Instructions tab at the bottom you will see the line by line instructions for filling out the form. When using the FUPLOAD form, a copy to your fund accountant, your fund accountant will then be able to copy and paste your entry into a form that can be read into Banner. This saves the time needed to retype the information. The FUPLOAD form can also be used to electronically submit journal entries. In addition to the FUPLOAD form you would also need to scan your documentation and attach it to an sent to your fund accountant. The with the FUPLOAD form and documentation should be sent by a person having approval authority on the FOAP’s being debited, the should indicate that the attached journal entry has been approved by the sender. If more than one approval is required an authorizing should be sent from each authorized approver. The FUPLOAD form is available at the web address above.

26. QUESTIONS ?
Do you have any questions on what we have covered?

27. General Accounting Office Contact List
Snyder, Lacey (970)
Sanchez, Noelle (970)
Shomers, Cheri (970)
Martin, Jeff (970)
Wills, Matthew (970)
Estevez, Alex (970)
Arnold, Kerese (970)
McGuire, Susan (970)
General Accounting Fax (970)
Accounting Services website
If you have additional questions please contact your fund accountant.