The example
The steps below use a sample distributor, Lone Star Industrial Supply. Your customers, items and numbers will differ; the window and the fields won’t.
You're closing February. The February bill for Software Subscriptions hasn't arrived yet, but the service was used in February. The department's estimate is $405.00. Accrue it so February carries its own expense.
| Field | Value |
|---|---|
| Journal | Accruals Journal |
| Date | Saturday, February 28 |
| Debit | 6700 Software Subscriptions |
| Credit | 2100 Accrued Liabilities |
| Source | ACCR |
| Reference | Feb estimate |
The real bill will be vouchered in March, so the accrual has to reverse at the start of March.
Step by step in Journal Entries
- 1.
Open Journal Entries from the Menu (Transaction, General Ledger).
- 2.
Journal: Accruals Journal.
Accruals sit in their own journal so the controller can review them together.
- 3.
Date: 02/28/2026, the last day of February. Period changes to 2 and Year stays 2026: the period comes from the date.
The date decides which month carries the entry. February is still open, so February can take it.
- 4.
Line 1, Account: 6700 (Software Subscriptions).
- 5.
Source: ACCR.
Source and Reference are required on every line. They are how someone finds this entry later.
- 6.
Reference: Feb estimate.
- 7.
Debit: $405.00. The expense goes up.
- 8.
Line 2, Account: 2100 (Accrued Liabilities).
- 9.
Source: ACCR.
- 10.
Reference: Feb estimate.
- 11.
Credit: $405.00. The Difference under the grid drops to 0.00.
Debits must equal credits. The entry cannot be saved while there is a difference.
- 12.
Open the Reversing Entry tab.
- 13.
Tick Create Reversing Entry. Period fills in 3 and Year 2026: the reversal posts on March 1.
When the real bill is vouchered in March, the reversal cancels the estimate, so March only carries the actual bill.
- 14.
Press Save. The message gives both transaction numbers: the accrual and its reversal.
Mistakes that cost money
These are the checks Simetta’s scored test makes on this task, and what each mistake costs a distributor when it happens for real.
Journal entry not posted
The month closes without it, so the financial statements are wrong and someone has to reopen the period or book it next month.
Posted to the wrong period
The expense shows in a month it does not belong to, so both months are misstated and month-over-month comparisons mislead.
Wrong GL account
The amount lands in the wrong line of the income statement or balance sheet, and budget owners chase a variance that is not theirs.
Accrual not set to reverse
When the real bill is vouchered next month the expense is booked a second time, and the accrued liability sits on the balance sheet forever.
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