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How to Post Journal Entries to Bank Accounts in Xero

There are two workarounds:

Author

Tam Nguyen
April 22, 2024

read time 5 minutes

Welcome to Zero to Xero. Where I show you how to make the most of Xero featuring tips and tricks, best practices, ecosystem apps, and more.

Today’s Email

  • How to post journal entries to Xero’s Bank Accounts via two methods

    • 2-step process

    • Current Asset creation

If you want to skip all the screenshots, scroll to the bottom. I’ve recorded a video to walk you through this.

Why Xero Won’t Let You Post to Cash Accounts

If you’re confused about posting journal entries to Bank Accounts in Xero you’ll want to read this.

I can’t be 100% sure but I assume that they don’t want non-accountants, who don’t know what they’re doing, to post to cash and throw off the ledger balance.

Where does this leave you though?

Bank accounts do not appear in the drop-down

Workarounds

There are two workarounds that I have come across over the years.

  1. The 2-Step Process

  2. Creating a Current Asset account

While neither of these options is ideal if you need to make adjustments consistently or in bulk…

They might get you by.

Method #1: The 2-Step Process

Use this method as a one-off. It’s a little manual so you won’t want to do this often.

  1. Create the journal entry and code to the clearing account where you would normally code to Cash

Code to the clearing account

  1. Create a spend or receive money transaction.

In this case, we are reducing the Bank Account balance by $1,000 so we’ll create a Spend Money.

Create a Spend Money to the appropriate account

  1. Code the transaction to the Clearing Account.

Code to the clearing account

The net effect of the transaction will be:

DR Prepayments $1000
CR Checking $1000

Method #2: Create a Current Asset Account

Use this method if you need to post these types of entries more consistently.

⚠️ Disclaimer: you will not be able to reconcile transactions posted to the current asset account.

This method is for special adjustments that will not impact the bank balance.

  1. Create a Current Asset account

  1. Post the Journal Entry

Code to the newly created Current Asset account

Notice how the two accounts are separate

  1. In the report editor (edit layout), group the new Current Asset account with the Bank Account

Collapse group for a clean report

The balance sheet now only shows one line item for checking

If you still need help:

Check out a video I recorded walking you through the steps above.

For more tutorials and video walkthroughs join the Zero to Xero Academy. Learn at your own pace alongside other accounting pros, stay up-to-date with new Xero updates, and access the course forever, it’s yours.

Hope to see you there,

Tam