Recurring journal entries are associated with particular expenses or transactions that are repeated every accounting period. They are typically done to record items like accruals, depreciation, amortization, and allocations. If the accounts involved and the amounts of the entry are identical each month, this is sometimes referred to as a standard journal entry.
Examples of recurring journal entries are the monthly rent paid for a piece of property or the expenses incurred for an insurance policy.
In the insurance policy example, if a company with a monthly reporting cycle were to spend $12,000 on a one-year insurance policy, then accounting would book a recurring journal entry each month to expense $1,000 of this policy. This standard entry would continue until the end of the policy period of 12 months, when the prepaid amount is fully amortized or equal to zero.
What Is the Preparation Process?
When accountants are setting up recurring journal entries, they need to define the total amount and schedule for allocating and posting this total. The formulas used to establish this schedule can be simple or complex, but they do need to have some logic to determine the amounts for each of the accounts that need to be repeated.
At the end of each reporting period, recurring journal entries are made to the appropriate accounts. Companies often spend a considerable amount of time manually tracking and posting these entries, and preparing the appropriate account reconciliations to verify that they have been properly recorded.
BlackLine’s Closing Journal Entries Solution
The BlackLine Journal Entry product automates the process for creating recurring journal entries. This product is a complete Journal Entry Management system and provides an automated solution for the creation, review, approval, and posting of journal entries.
Journal entry templates ensure standardization across the organization, and validation rules check entries for errors before posting. The product contains features for cloning recurring journal entries and importing journals and journal lines from report writers or spreadsheets to simplify their creation.
It also provides integrated storage for supporting documentation, such as schedules and spreadsheets. Advanced features include the ability to link to appropriate policies and procedures, and automatic posting and status tracking of journal entries for real-time updates.
The BlackLine Account Reconciliations product integrates with the Journals product to further automate and streamline the creation of recurring journals. It includes a template to track recurring entries that records the original amount, open date, and the dates on which amortization should begin and end.
Additionally, The BlackLine Variance Analysis product monitors fluctuations in account balances, so that analysis of balance changes can easily be performed. This is useful in identifying missing or incorrect recurring journal entries.
BlackLine builds solutions that modernize the finance and accounting function to empower greater productivity and detect accounting errors before they become issues. With a fully auditable trail, the Journal Entry product will help save you time in every step of your recurring journal entry process.