> For the complete documentation index, see [llms.txt](https://docs.xorosoft.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.xorosoft.com/xoroerp-1/accounting/xoro-accounting-deep-dive/how-to-create-a-journal-entry-je-in-ar-and-ap.md). # How to Create a Journal Entry (JE) in AR and AP ### Overview In certain accounting scenarios, you may need to create a **Journal Entry (JE)** involving **Accounts Receivable (AR)** or **Accounts Payable (AP)** to adjust balances or resolve variances. When AR or AP is used in a Journal Entry in XoroERP, the system automatically generates a related transactional document such as an **Invoice, Credit Memo, Bill, or Vendor Credit**. These documents are system-generated and remain linked to the original Journal Entry. This article explains how to correctly create a Journal Entry in **AR** and **AP**, and how the related documents are created automatically. *** ### Creating a Journal Entry in Accounts Receivable (AR) Follow the steps below to create a Journal Entry using **Accounts Receivable**. #### Step 1: Navigate to the Journal Entry Module 1. Go to the **JE (Journal Entry) module**. 2. Click **Create New Journal Entry**. *** #### Step 2: Select AR Account 1. In the **Account** field, select **Accounts Receivable (AR)**. 2. Enter the **Amount**. 3. Select the **Entity (Customer)**. 4. Choose the **Store** associated with the transaction. {% hint style="info" %} * When **AR is used in a Journal Entry**, selecting the **Customer (Entity)** is mandatory. * The **Customer Currency must match the Account Currency**. * If applicable, select the **Tax Code**. {% endhint %} *** #### Step 3: Balance the Journal Entry Add a **credit or debit entry** to balance the Journal Entry variance. A Journal Entry can only be saved once the **total debit and credit amounts are equal**. #### Currency Rule The **Journal Entry currency must match both:** * The **Account currency** * The **Entity (Customer) currency** *** ### System Behaviour After Creating AR Journal Entry Once the Journal Entry is created, the system automatically generates a related document. You can view this document in the **Credit Memo Centre**. #### Important Rule {% hint style="warning" %} The **Accounts Receivable account should not have a tax code assigned**. {% endhint %} *** #### Case 1: AR Used as Credit with Customer Entity If **AR is credited in the Journal Entry** with a **Customer selected as the Entity**: The system automatically creates a **Credit Memo**. #### Important Notes * This **Credit Memo is system-generated**. * It **cannot be edited or voided directly**. * To void the Credit Memo, you must **void the linked Journal Entry**. * When the **Journal Entry is voided**, the **associated Credit Memo is automatically voided**. *** #### Case 2: AR Used as Debit with Customer Entity If **AR is debited in the Journal Entry** with a **Customer selected as the Entity**: The system automatically creates an **Invoice**. #### Important Notes * This **Invoice is system-generated**. * It **cannot be edited or voided directly**. * To void the Invoice, you must **void the linked Journal Entry**. * When the **Journal Entry is voided**, the **associated Invoice is automatically voided**. *** ### Creating a Journal Entry in Accounts Payable (AP) The process for **Accounts Payable (AP)** is largely the same as AR, with the main difference being the **Entity type**. Instead of selecting a **Customer**, you must select a **Vendor**. *** #### Step 1: Navigate to the Journal Entry Module 1. Go to the **JE module**. 2. Create a new Journal Entry. *** #### Step 2: Select AP Account 1. In the **Account field**, select **Accounts Payable (AP)**. 2. Enter the **Amount**. 3. Select the **Entity (Vendor)**. 4. Select the **Store**. *** #### Step 3: Balance the Journal Entry Create the necessary **debit or credit line** to balance the Journal Entry. The same rules apply: * **Account currency must match the Vendor currency** * Debit and Credit totals must balance. *** ### System Behavior After Creating AP Journal Entry When AP is used in a Journal Entry, XoroERP automatically creates related vendor documents. *** #### Case 1: AP Used as Credit with Vendor Entity If **AP is credited in the Journal Entry** with a **Vendor selected as the Entity**: The system automatically creates a **Bill**. #### Important Notes * The **Bill is system-generated**. * It **cannot be edited or voided directly**. * To void the Bill, the **linked Journal Entry must be voided**. * When the **Journal Entry is voided**, the **associated Bill is automatically voided**. *** #### Case 2: AP Used as Debit with Vendor Entity If **AP is debited in the Journal Entry** with a **Vendor selected as the Entity**: The system automatically creates a **Vendor Credit**. #### Important Notes * The **Vendor Credit is system-generated**. * It **cannot be edited or voided directly**. * To void the Vendor Credit, the **linked Journal Entry must be voided**. * When the **Journal Entry is voided**, the **associated Vendor Credit is automatically voided**. *** ### Summary When AR or AP accounts are used in a Journal Entry in XoroERP: * The **Customer or Vendor must be selected as the Entity**. * The **currency must match between Account, Entity, and Journal Entry**. * The system **automatically generates related documents** such as: * Invoice * Credit Memo * Bill * Vendor Credit * These documents **cannot be edited or voided independently**. * To remove them, you must **void the linked Journal Entry**. #### FAQs #### **Why doesn't my Accounts Receivable (A/R) Aging balance match the Balance Sheet?** **Answer** A common reason for a difference between the **Accounts Receivable (A/R) Aging** report and the **Balance Sheet** is that a **Journal Entry (JE)** has been posted directly to an **Accounts Receivable GL Account** without specifying an associated **Customer Entity**. When an A/R account is used in a Journal Entry **without a Customer**, the transaction updates the **General Ledger** and is reflected on the **Balance Sheet**. However, because no customer is associated with the transaction, it is **not recorded in the Accounts Receivable subledger** and therefore does not appear in the **A/R Aging** report. As a result, the Balance Sheet and the A/R Aging report may show different balances. #### **Best Practice** Whenever posting directly to an **Accounts Receivable** account through a Journal Entry, ensure that the appropriate **Customer Entity** is specified. This keeps the General Ledger and the Accounts Receivable subledger synchronized and helps prevent reconciliation differences. *** #### **Can I view Accounts Receivable Aging by General Ledger account?** No. The standard **Accounts Receivable Aging** reports in XoroERP are designed to display outstanding receivable balances **by customer**, rather than by General Ledger account. The A/R Aging reports organize receivables using information such as: * Customer * Payment Terms * Currency * Aging Buckets * Outstanding Amount * Home Currency Amount #### **How can I reconcile A/R Aging with the General Ledger?** If you need to compare customer receivable balances with the General Ledger, the recommended approach is to use both the **Accounts Receivable Aging** report and the **Account Register** (or **Trial Balance**) together. **Recommended reconciliation process:** 1. Run the **Accounts Receivable Aging Detail (By Due Date)** report to review customer-level outstanding balances. 2. Open the **Account Register** (or **Trial Balance**) for the Accounts Receivable control account. 3. Compare the totals between the A/R Aging report and the General Ledger. If the totals do not match, review whether any Journal Entries have been posted directly to the Accounts Receivable account without an associated Customer Entity, as these entries appear in the General Ledger but not in the A/R Aging report. #### **Summary** * **A/R Aging** provides receivable balances **by customer**. * **Account Register** and **Trial Balance** provide balances **by General Ledger account**. * Use both reports together to reconcile customer receivables with the General Ledger and identify any discrepancies. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation by asking a question. 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