Embedded Files
Thanks for stopping by. As a Virtual Bookkeeper, I help businesses stay organized, accurate, and financially confident. Please pick a suitable time.
Transaction Entries in Xero refer to the process of recording all financial activities that occur within a business. These entries ensure that every invoice issued, bill received, payment made, and money received is accurately captured in the accounting records. Proper transaction entry is the foundation of clean, reliable bookkeeping and directly affects financial reporting, reconciliations, and decision-making.
In Xero, transaction entries are created across different modules, including Sales, Purchases, Banking, Payroll, and Journals. Each entry updates the general ledger automatically, ensuring accuracy and real-time financial visibility.
Below are real practical transaction entries I performed inside my JiduffKelv Digital World Mock Company using Xero Accounting Software. Each screenshot demonstrates my ability to record, categorize, and manage financial transactions accurately across different Xero modules.
My goal is to showcase clean bookkeeping practices, attention to detail, and a strong understanding of Xero workflows — demonstrating my readiness for real-world virtual accounting and bookkeeping roles.
Sales Transactions Section
Sales Transactions in Xero represent every activity connected to generating income, including raising customer invoices, issuing credit notes, recording part or full customer payments, and managing outstanding receivables. This section helps track what customers owe, when payments are due, and how each sale contributes to business revenue.
Through automation, Xero posts the correct accounting entries in the background—updating Sales Revenue, Accounts Receivable, GST/VAT, and customer balances—ensuring accurate financial reporting, improved cash-flow monitoring, and full visibility into the entire sales cycle from invoice creation to final settlement.
Quote
A quote in Xero is a document used to present proposed prices for products or services before work begins. It helps a business give customers an estimate or offer, which can later be approved and converted into a sales invoice. Quotes do not affect accounts or the general ledger until they are converted into financial transactions.
Quote Entry – QU-0001
What happened: Created a quote for Derek Cunningham for proposed products sales.
Amount: ₦185,000
Date Issued: 28th Oct 2025
Expiry Date: 18th Nov 2025
Status: Sent
Accounts impacted:
None at this stage.
Quotes do not post to the general ledger. They only become financial transactions once approved and converted into a sales invoice.
Key Skill Demonstrated: Preparing professional quotes, selecting correct item/income category, applying due dates, and understanding pre-invoice workflow in Xero.
Invoice
An invoice in Xero is a financial document issued to customers to request payment for goods or services provided. Once created, an invoice becomes part of the accounting records and automatically updates the general ledger. It increases revenue and records the amount owed by the customer under Accounts Receivable.
Invoices form the basis for tracking customer payments, cash flow, and overall sales performance.
Invoice Entry – INV-0006
What happened: Created a sales invoice for FlashMart for the supply of Men’s Wears.
Amount: ₦314,000
Date Issued: 28th Oct 2025
Due Date: 11th Nov 2025
Payment Status: Awaiting Payment
Accounts Impacted:
Dr Accounts Receivable – ₦314,000
Cr Sales / Product Sales – ₦314,000
The invoice increases revenue and records the amount owed by the customer, updating the general ledger immediately.
Key Skill Demonstrated: Accurate invoice creation, correct revenue categorization, application of payment terms, and understanding of Accounts Receivable workflow in Xero.
Invoice Payment
An invoice payment in Xero records money received from a customer to settle an outstanding sales invoice. Payments can be full, partial, or combined with credit notes. Once applied, Xero reduces the customer’s Accounts Receivable balance and updates the bank account. This process ensures accurate cash tracking, customer balance management, and clean financial records.
Invoice Payment Entry – INV-0006
What happened: A customer payment of ₦188,000 was received from FlashMart and applied to Invoice INV-0006.
A Credit Note of ₦126,000 was also applied to the same invoice to clear the remaining balance.
Invoice Amount: ₦314,000
Payment Applied: ₦188,000
Credit Note Applied: ₦126,000
Invoice Status: Paid in Full
Accounts Impacted
1. When Payment Was Received (₦188,000)
Dr Bank Account – ₦188,000
Cr Accounts Receivable – ₦188,000
2. When Credit Note Was Applied (₦126,000)
Dr Sales Returns & Allowances – ₦126,000
Cr Accounts Receivable – ₦126,000
The exact debit account depends on how credit note was categorized — usually “Sales Returns & Allowances” or “Sales Adjustment”.
Result: The payment plus the credit note fully cleared Invoice INV-0006, reducing Accounts Receivable to zero and marking the invoice as Paid.
Key Skills Demonstrated:
Applying customer payments correctly
Applying credit notes to outstanding invoices
Understanding the full Accounts Receivable workflow
Managing partial payments and invoice reconciliation
Accurate clearing of customer balances in Xero
Repeating Invoice
A repeating invoice in Xero is an automated invoice template used for customers who are billed regularly for the same products or services. Once set up, Xero generates the invoice automatically based on the schedule you define (weekly, monthly, yearly, etc.), ensuring consistent billing and reducing manual workload.
Repeating invoices update the general ledger each time they are generated.
Repeating Invoice Entry – Reference: PO:0021
What happened: Created a Repeating Invoice Template for FlashMart for ongoing supply of Men’s Wears.
Amount: ₦314,000
Frequency: Monthly
Invoice Date: 28th Oct 2025
Due Date: 14 days after the invoice date
End Date: 28th Dec 2025
Status: Approved
Accounts Impacted (when the invoice is automatically created):
Dr Accounts Receivable – ₦314,000
Cr Sales / Product Sales – ₦314,000
Repeating Invoice templates themselves do not affect accounts — only the generated invoices do.
Key Skill Demonstrated: Setting up automated billing, applying recurring terms, maintaining accuracy in revenue recognition, and optimizing workflow efficiency in Xero.
Purchase Transactions Section
Purchase Transactions in Xero capture every activity related to the money a business spends to operate effectively. This includes acquiring goods, services, assets, or any resources required for daily operations. These transactions help businesses monitor expenses, manage supplier relationships, and keep track of all outstanding amounts owed to vendors through the Accounts Payable system.
Xero automatically posts the correct accounting entries—updating Expenses, Cost of Sales, Prepayments, Fixed Assets, and Accounts Payable—ensuring accurate expense categorization and reliable financial reporting.
This section covers a wide range of activities such as creating and approving purchase orders, entering supplier bills, applying vendor credit notes, recording direct expenses, reconciling supplier payments, and tracking the entire lifecycle of a purchase from request to final settlement.
By managing purchases efficiently, businesses gain full visibility into spending patterns, cash-outflow planning, and cost control.
Purchase Orders
A Purchase Order (PO) in Xero is a formal document sent to a supplier to request goods or services. It outlines the items, quantities, and agreed prices before the actual purchase occurs. POs help businesses track orders, control spending, and maintain accurate records of pending purchases. Once a PO is approved and accepted by the supplier, it can later be converted into a bill for payment.
Purchase Order – Draft Stage
This screenshot shows the Purchase Order created for inventory supplies before it was finalized. At this stage, the PO is still in Draft, meaning it has not yet been sent to the supplier or approved internally.
Draft POs help businesses plan purchases, verify quantities, and confirm pricing before committing to the order.
Purchase Order Entry – PO-0002
Supplier Name: Tiffany Manning
Amount: ₦218,000
Items Ordered: Mens Wear
PO Date: 29 Oct 2025
Delivery Expected: 12 Nov 2025
Status: Draft
What Happened:
A Purchase Order was drafted for inventory items from Tiffany Manning. The draft allowed the business to review the quantities, pricing, and item details before officially sending the PO to the supplier. No financial impact occurs at this stage.
Accounts Impacted:
None yet.
Draft Purchase Orders do not affect the general ledger until they are approved and converted into a bill.
Key Skills Demonstrated:
Creating structured draft POs in Xero
Reviewing supplier order details before approval
Preparing accurate inventory purchase records
Understanding Xero’s procurement workflow
Purchase Order – Awaiting Approval
This screenshot shows the Purchase Order after it has been reviewed and moved from Draft to Awaiting Approval. At this stage, the order is pending authorization from a manager or designated approver before it can be sent to the supplier.
This step is important for internal control and preventing unauthorized purchases.
Purchase Order Entry – PO-0002
Supplier Name: Tiffany Manning
Amount: ₦218,000
Items Ordered: Mens Wear
PO Date: 29 Oct 2025
Delivery Expected: 12 Nov 2025
Status: Awaiting Approval
What Happened:
The draft purchase order was reviewed for accuracy—item quantities, pricing, and supplier details. It was then moved to the Awaiting Approval stage to ensure internal authorization before committing to the purchase.
Accounts Impacted:
None yet.
No ledger movement occurs until the PO is approved and later converted to a bill.
Key Skills Demonstrated:
Implementing internal purchasing controls
Ensuring proper purchase authorization
Maintaining transparent procurement workflow
Validating supplier and inventory details before approval
Purchase Order – Approved
This screenshot shows the Purchase Order after it has been fully approved. At this stage, the PO has passed internal review and authorization, confirming that the business is ready to proceed with ordering inventory from the supplier. Once approved, the PO can be sent to the supplier or used internally to confirm the purchase.
Purchase Order Entry – PO-0002
Supplier Name: Tiffany Manning
Amount: ₦218,000
Items Ordered: Mens Wear
PO Date: 29 Oct 2025
Delivery Expected: 12 Nov 2025
Status: Approved
What Happened:
The purchase order passed internal verification and was approved for processing. Approval confirms that:
The purchase is authorized
The pricing and quantities are correct
The supplier and inventory details have been validated
This prepares the PO for the next step—sending it to the supplier or converting it into a bill when the goods are delivered.
Accounts Impacted:
None.
Approved Purchase Orders still do not impact the accounting ledger until a bill is created.
Key Skills Demonstrated:
Understanding Xero’s approval workflow
Implementing proper purchasing authorization
Ensuring accuracy in supplier documents
Maintaining clear procurement records before financial entry
Bill
A Bill in Xero is a purchase transaction that records money your business owes a supplier for goods or services received. Bills help track expenses, manage accounts payable, and schedule payments accurately. When a bill is entered, Xero automatically updates expenses and increases the amount owed to the supplier.
Bill Entry – Reference: RFQ-0005
Supplier Name: Tiffany Manning
Amount: ₦218,000
Item Purchased: Men’s Wear Inventory
Bill Date: 29 Oct 2025
Due Date: 12 Nov 2025
Payment Status: Awaiting Payment
What Happened: Created and recorded a supplier bill for Men’s Wear inventory purchased from Tiffany Manning. This transaction was entered to update stock levels, track the supplier liability, and schedule payment before the due date.
Accounts Impacted:
Dr Inventory / Stock on Hand
Cr Accounts Payable
Key Skills Demonstrated:
Accurate supplier bill creation
Correct inventory categorization
Knowledge of stock-related expense treatment
Cash-flow planning using due dates
Proper management of accounts payable
Supplier Credit Note
A supplier credit note in Xero is issued when a business returns goods, receives a discount, or corrects an overcharge. Applying a credit note to a bill reduces the amount owed to the supplier and updates inventory or expenses accordingly. This ensures accurate accounts payable balances and clean financial records.
Credit Note Applied to Bill – Reference: RFQ-0005
Credit Note Amount: ₦48,000
Reason for Credit: Return of Men’s Wear Inventory to supplier (damaged/incorrect items)
Supplier Name: Tiffany Manning
Original Bill Amount: ₦218,000
Adjusted Outstanding Balance After Credit: ₦218,000 − ₦48,000 = ₦170,000
What Happened: A supplier credit note was created and applied to Bill RFQ-0005 due to the return of part of the Men’s Wear inventory. This reduced the total amount owed to the supplier and updated inventory and accounts payable accordingly.
Accounts Impacted:
Dr Accounts Payable (reduces what we owe the supplier)
Cr Inventory / Stock on Hand (reverses the value of returned items)
Key Skills Demonstrated:
Creating and applying supplier credit notes in Xero
Understanding inventory adjustments from returns
Reducing supplier balances using credits
Maintaining accurate accounts payable records
Ensuring correct financial treatment of stock returns
Bill Payment
A bill payment in Xero records money paid to a supplier to settle an outstanding bill. Once applied, Xero reduces Accounts Payable, updates the supplier’s balance, and reflects the cash outflow in the bank account. This process ensures accurate tracking of expenses, liabilities, and cash flow.
Bill Payment Applied – Reference: RFQ-0005
Amount Paid: ₦170,000
Supplier Name: Tiffany Manning
Original Bill Amount: ₦218,000
Credit Note Applied Earlier: ₦48,000
Remaining Balance Paid: ₦170,000
Payment Status: Paid in Full
Payment Method: Bank Payment
What Happened: A payment of ₦170,000 was applied to settle the remaining balance of Bill RFQ-0005 after a supplier credit was used. This closed the bill, reduced accounts payable, and recorded the cash outflow from the business bank account.
Accounts Impacted:
Dr Accounts Payable (reduces supplier liability)
Cr Bank Account (cash outflow)
Key Skills Demonstrated:
Applying payments correctly to outstanding bills
Understanding cash-to-payables flow in Xero
Managing supplier balances after credit notes
Ensuring correct bank reconciliation entries
Maintaining clean and accurate accounts payable records
Bill Complete Settlement
This screenshot shows the complete settlement of Bill RFQ-0005. A supplier credit note of ₦48,000 was first applied due to returned inventory, reducing the bill total. The remaining balance of ₦170,000 was then fully paid through a bank payment. The bill is now Paid in full, and the supplier balance has been updated to 0.00 in Xero.
Bill Settlement Summary – RFQ-0005
Screenshot showing Credit Note + Payment Applied
What This Screenshot Shows:
This screenshot displays the complete settlement of Bill RFQ-0005, including:
A supplier credit note of ₦48,000 applied due to returned inventory
A final payment of ₦170,000 recorded to fully clear the remaining balance
Together, these actions close the bill and bring the supplier balance to ₦0.00.
What Happened: The supplier credit note was first applied, reducing the amount owed from ₦218,000 to ₦170,000. After that, a bank payment of ₦170,000 was applied to settle the outstanding balance. The bill is now marked as Paid in Xero.
Accounts Impacted:
Dr Accounts Payable – Both the credit note and the payment reduce the supplier liability
Cr Inventory / Stock on Hand – From the credit note
Cr Bank Account – From the final payment
Key Skills Demonstrated:
End-to-end bill management
Applying supplier credits correctly
Recording final payments to close bills
Understanding accounts payable workflows
Ensuring clean reconciliation and accurate supplier balances
Repeating Bill
A repeating bill in Xero is used for expenses that occur on a regular schedule—such as subscriptions, utilities, or monthly service fees. Xero automatically creates the bill based on the frequency set, helping businesses stay organized, avoid missed payments, and maintain consistent expense tracking.
Repeating Bill Setup – Delta Media
Supplier Name: Delta Media
Amount: ₦683,000
Frequency: Monthly
Next Bill Date: 29th Nov 2025
Due Date: 14 days after bill date
End Date: 29th Dec 2025
Status: Save s Draft
What Happened: A monthly repeating bill was created for Delta Media to automate regular payments for ongoing services. Xero will automatically generate a new bill every month starting from 29th November 2025 until the end date of 29th December 2025.
Accounts Impacted:
When each bill is generated:
Dr Inventory/ Stock on Hand Account
Cr Accounts Payable
Note: The specific expense account depends on the category chosen in your screenshot.
Key Skills Demonstrated:
Setting up repeating bills for automation
Configuring bill frequency and due dates
Proper classification of recurring expenses
Improving workflow efficiency using Xero automation
Ensuring accurate and timely accounts payable entries
Expense Transactions Section
An expense in Xero represents money spent by the business on everyday operational costs such as travel, meals, supplies, subscriptions, or reimbursements to staff. Unlike supplier bills, which create a liability to be paid later, expenses are usually recorded when the money is spent immediately.
Expense entries help track business spending, categorize costs correctly, and maintain accurate financial statements. They are essential for budgeting, reporting, and understanding how cash flows out of the business.
Expense Claims
An expense claim in Xero is used when staff or business owners spend their own money on business-related expenses—such as transportation, meals, office supplies, subscriptions, or purchases made on behalf of the business. Submitting an expense claim allows the business to record the cost, categorize it correctly, and later reimburse the staff member.
Expense claims help track out-of-pocket spending, maintain accurate expense records, and ensure smooth reimbursements.
Expense Claim – Submited
This screenshot shows an expense claim submitted for ₦94,500.00 covering business-trip costs personally paid by the staff. The claim includes expenses such as hotel booking, feeding, airtime, and car refilling, all recorded as reimbursable.
The entry demonstrates how staff out-of-pocket expenses are captured, categorized, and submitted for reimbursement in Xero.
Expense Claim Entry – 29th Oct 2025
Amount: ₦94,500.00
Description: Expenses for business trip
Expense Type: Personal Money (Reimbursable)
Payment Status: Submitted (Awaiting Reimbursement)
Date: 29th Oct 2025
Staff Name: Jideofor Okwudili Odiegwu
Items Included:
Hotel booking
Telephone airtime
Feeding
Car fueling/refill
Professional Fees
What Happened: A staff expense claim was submitted for ₦94,500.00 covering multiple business-related travel costs personally paid by the staff member. The claim was recorded under Personal Money (Reimbursable), ensuring the business recognizes the cost and prepares for reimbursement.
Accounts Impacted:
Dr Professional Fees
Dr General Expenses
Dr Staff Welfare / Refreshments
Dr Telephone & Internet
Cr Expense Reimbursement Liability
Key Skills Demonstrated:
Recording multi-item expense claims in Xero
Correct categorization of travel-related costs
Processing out-of-pocket staff expenses
Maintaining accurate reimbursement records
Ensuring compliance in expense documentation
Expense Claim – Awaiting Payment
This screenshot shows the expense claim (₦94,500.00) now moved to Awaiting Payment, meaning the claim has been approved and is ready for reimbursement. It confirms that the business has recognized the liability and is preparing to reimburse the staff for the business-trip expenses.
Expense Claim Entry – 29th Oct 2025
Amount: ₦94,500.00
Description: Expenses for business trip
Expense Type: Personal Money (Reimbursable)
Payment Status: Awaiting Payment
Date: 29th Oct 2025
Staff Name: Jideofor Okwudili Odiegwu
Items Included:
Hotel booking
Telephone airtime
Feeding
Car fueling/refill
Professional Fees
What Happened: After the expense claim was submitted and reviewed, it was approved and moved into the Awaiting Payment stage. At this point, the claim becomes a payable amount owed to the staff member and awaits reimbursement through the business’s bank account.
Accounts Impacted at This Stage:
No additional accounts change at this point — the impact already occurred when the claim was submitted.
The system simply shows that the Expense Reimbursement Liability is pending payment.
Key Skills Demonstrated:
Understanding Xero’s reimbursement workflow
Tracking staff claims from submission to approval
Maintaining accurate accounts payable records
Ensuring internal control over staff reimbursements
Expense Claim – Paid
This screenshot shows the expense claim (₦94,500.00) after it has been paid, meaning the staff member has been reimbursed. It confirms that the business has settled the liability and the reimbursement process is complete.
Expense Claim Entry – 29th Oct 2025
Amount: ₦94,500.00
Description: Expenses for business trip
Expense Type: Personal Money (Reimbursable)
Payment Status: Paid
Date: 29th Oct 2025
Staff Name: Jideofor Okwudili Odiegwu
Items Included:
Hotel booking
Telephone airtime
Feeding
Car fueling/refill
Professional Fees
What Happened: The expense claim of ₦94,500.00 was fully reimbursed to the staff member. The payment cleared the Expense Reimbursement Liability in Xero, marking the claim as Paid and completing the reimbursement workflow.
Accounts Impacted:
Dr Expense Reimbursement Liability (liability cleared)
Cr Bank Account (cash outflow)
Key Skills Demonstrated:
Recording reimbursement payments accurately in Xero
Completing the staff expense workflow from submission to payment
Maintaining clean accounts payable and reimbursement records
Ensuring proper internal control over staff expenses
Mileage Claims
A mileage claim is used to record business-related travel using a personal vehicle. Xero allows users to submit claims based on kilometers/miles driven, using a fixed rate per km/mile.
This ensures the business compensates the staff member fairly while maintaining accurate logs of travel-related spending.
Mileage claims improve transparency and provide proper documentation for business travel expenses.
Mileage Claim – Approved
This screenshot shows a mileage claim of ₦7,050.00 for a 15 km business travel on 29th Oct 2025. The claim has been approved, meaning the business recognizes the travel expense and will reimburse the staff member if applicable. It demonstrates proper tracking of business travel costs in Xero.
Mileage Claim Entry – 29th Oct 2025
Distance Travelled: 15 km
Purpose: Business Meeting Travel
Amount: ₦7,050.00
Account: Travel – National
Status: Approved
Date: 29th Oct 2025
What Happened: A mileage claim was submitted and approved for business-related travel of 15 km. The claim amount of ₦7,050.00 was calculated based on Xero’s mileage reimbursement rate and recorded under the Travel – National account to ensure accurate expense tracking.
Accounts Impacted:
Dr Travel – National (recognizes the travel expense)
Cr Expense Reimbursement / Payable (if reimbursable to staff)
Key Skills Demonstrated:
Recording mileage claims accurately in Xero
Tracking business travel expenses
Applying correct mileage rates
Maintaining accurate reimbursement and expense records
Following internal approval and accounting workflows
Mileage Claim – Awaiting Payment
This screenshot shows the mileage claim of ₦7,050.00 for 15 km business travel now moved to Awaiting Payment, meaning the claim has been approved and is ready for reimbursement. It confirms that the business recognizes the liability and is preparing to reimburse the staff member.
Mileage Claim Entry – 29th Oct 2025
Distance Travelled: 15 km
Purpose: Business Meeting Travel
Amount: ₦7,050.00
Account: Travel – National
Status: Awaiting Payment
Date: 29th Oct 2025
What Happened: After the mileage claim was submitted and approved, it was moved into the Awaiting Payment stage. At this point, the claim becomes a payable amount owed to the staff member and awaits reimbursement through the business’s bank account.
Accounts Impacted at This Stage:
No additional account changes occur at this point — the impact already happened when the claim was submitted. The system simply shows that the Expense Reimbursement Liability is pending payment.
Key Skills Demonstrated:
Understanding Xero’s mileage reimbursement workflow
Tracking approved staff travel claims
Maintaining accurate accounts payable and reimbursement records
Ensuring internal control over staff travel expenses
Mileage Claim – Paid
This screenshot shows the mileage claim of ₦7,050.00 for 15 km business travel after it has been paid, meaning the staff member has been reimbursed. It confirms that the business has settled the liability and the reimbursement process is complete.
Mileage Claim Entry – 29th Oct 2025
Distance Travelled: 15 km
Purpose: Business Meeting Travel
Amount: ₦7,050.00
Account: Travel – National
Status: Paid
Date: 29th Oct 2025
What Happened: The mileage claim of ₦7,050.00 was fully reimbursed to the staff member. The payment cleared the Expense Reimbursement Liability in Xero, marking the claim as Paid and completing the mileage reimbursement workflow.
Accounts Impacted:
Dr Expense Reimbursement Liability (liability cleared)
Cr Bank Account (cash outflow)
Key Skills Demonstrated:
Recording mileage reimbursements accurately in Xero
Completing staff travel claim workflows from submission to payment
Maintaining clean accounts payable and reimbursement records
Ensuring proper internal control over travel expenses
Journal Entries Section
Journal Entries in Xero are used to record financial transactions that do not originate from invoices, bills, payments, or other standard modules. They help adjust accounts, correct errors, allocate expenses, record accruals/prepayments, depreciation, payroll adjustments, or any manual accounting entries required to maintain accurate financial statements.
Every journal entry contains a debit and a credit, ensuring that the general ledger remains balanced, and it directly impacts the financial statements.
Journal entries are an essential part of advanced bookkeeping and demonstrate strong accounting knowledge, accuracy, and attention to detail.
Accrued Expense Adjustment
Accrued expenses are costs that have been incurred but not yet billed or paid. In Xero, an accrued expense adjustment ensures that expenses are recorded in the correct accounting period, even if the supplier’s bill has not been received. This keeps financial statements accurate and compliant with accrual accounting principles.
Journal Entry – Accrued Rent Expense Adjustment
This screenshot shows a manual month-end journal created to record accrued rent for the office car park. Since the supplier has not yet issued a bill for October, the expense must still be recognized in the correct period. This ensures accurate financial statements and compliance with accrual accounting principles.
Journal Entry Details
Journal Date: 31 Oct 2025
Journal No: #154
Reference: Accrued Rent (Month-End Adjustment)
Amount: ₦20,000
Narration: Month-end accrual for expenses incurred but not yet billed (October Office Car Park Rent)
Accounts Impacted
Dr Rent Expense (Expense)
Cr Accrued Expenses (Liability)
This recognizes the rent expense for the month and records the unpaid obligation as a liability until the supplier’s bill is received.
What Happened: A journal entry was posted to accrue ₦20,000 for October office car park rent. The supplier had not issued an invoice yet, but the expense belongs to October. This adjustment ensures the financial statements reflect the true cost of operations for the month.
Key Skills Demonstrated
Applying accrual accounting principles correctly
Performing month-end adjustments
Ensuring expenses are recognized in the proper period
Using liability accounts to track unbilled obligations
Maintaining accurate financial statements for reporting
Journal Entry – Rent Payment (Clearing Accrued Rent)
This screenshot shows the payment made to the office landlord to settle the previously accrued rent expense for October. Once the payment is recorded, the accrued liability created earlier is cleared.
Payment Details
Payment Date: 6th Nov 2025
Reference: Record Rent Payment
Paid To: Office Landlord
Amount: ₦20,000
Payment Method: Bank Account
Accounts Impacted
Dr Accrued Expenses (Liability)
Cr Bank Account
This removes the liability and reflects the cash outflow from the business.
What Happened: A payment of ₦20,000 was made to the landlord to settle the October car park rent. This payment clears the Accrued Expenses liability that was created through the month-end journal entry.
Key Skills Demonstrated
Applying correct matching of accrual entries with settlement payments
Understanding expense accrual and reversal workflow in Xero
Maintaining accurate liabilities and cash records
Recording vendor/landlord payments properly
Ensuring clean audit trail from accrual → payment
Customer Prepayment (Unearned Revenue)
This represents money received from a customer before the goods or services delivered. Because the obligation has not yet been fulfilled, the amount cannot be treated as income at the time of receipt. Instead, it is recorded as a liability under Unearned Revenue. This shows that the business still owes the customer value in the form of future goods or services. Once the delivery is completed, the liability is cleared and the amount is then recognized as actual revenue in the proper period. This process ensures accurate reporting and compliance with accrual accounting principles.
Customer Prepayment (Unearned Revenue)
This screenshot shows a manual journal created to record an advance payment received from Gonzalez Traders. Since the goods/services have not yet been delivered, the payment cannot be recognized as revenue. Instead, it is recorded as a liability called Unearned Revenue until the business fulfills its obligation.
This ensures accurate financial reporting and proper application of accrual accounting principles.
Journal Entry Details
Journal Date: 30 Oct 2025
Journal No: Prepayment INV-0013
Reference: Customer Prepayment – Unearned Revenue
Amount: ₦570,000
Narration: Advance payment received from Gonzalez Traders for future service/product delivery. Recognized as Unearned Revenue until earned.
Accounts Impacted
Dr Bank / Cash (Asset)
Cr Customer Deposits / Unearned Revenue (Liability)
This records the cash received and creates a liability representing the company’s obligation to deliver goods/services later.
What Happened:
A customer, Gonzalez Traders, made an advance payment of ₦570,000. Because the business has not yet delivered the product or rendered the service, the amount cannot be recognized as income.
This journal entry ensures the payment is correctly classified as a liability until the revenue is earned.
Key Skills Demonstrated
Understanding customer prepayments in Xero
Applying accrual accounting rules for unearned revenue
Recording advance payments properly
Managing liability accounts for customer deposits
Ensuring revenue is not recognized prematurely
Recognition of Revenue from Customer Prepayment
This screenshot shows the manual journal created to recognize revenue previously recorded as Unearned Revenue when Gonzalez Traders made an advance payment. Since the service/product has now been fully delivered on 9th Nov 2025, the amount must be moved from a liability to actual revenue.
This ensures the financial statements accurately reflect income earned during the correct accounting period.
Journal Entry Details
Journal Date: 09 Nov 2025
Journal No: #141
Reference: Revenue Recognition – Gonzalez Traders Prepayment
Amount: ₦570,000
Narration: Recognition of revenue for services/products delivered to Gonzalez Traders on 9th Nov 2025. Prepayment now earned and reclassified from liability to revenue.
Accounts Impacted
Dr Customer Deposits / Unearned Revenue (Liability)
Cr Service Income (Income)
This reduces the liability created when the prepayment was received and records the amount as earned income.
What Happened:
The job for Gonzalez Traders was completed and delivered on 9th Nov 2025. Since the obligation has been fulfilled, the prepayment of ₦570,000 must now be recognized as revenue. This journal moves the amount out of Unearned Revenue and into Service Income, ensuring the income is reported in the correct period.
Key Skills Demonstrated
Applying revenue recognition principles in Xero
Converting customer deposits into earned revenue after delivery
Maintaining accurate liability and income balances
Ensuring compliance with accrual accounting standards
Tracking the full lifecycle of customer prepayments
Acquisition of Asset & Depreciation Journals
This section covers how I record the purchase of business assets and the systematic allocation of fixed asset cost over time through depreciation. Acquisition journals capture the purchase of intangible assets, linking them to the correct accounts and ensuring accurate reflection of the company’s investments. Depreciation journals allocate the cost of fixed assets over their useful life, reducing the asset value on the balance sheet and recognizing depreciation expense in the income statement.
Together, these journals demonstrate my ability to manage fixed assets, apply accounting principles correctly, and maintain accurate financial statements over time.
Acquisition of Intangible Asset – Goodwill
This entry records the purchase of Goodwill, an intangible asset that represents the value of a business’s brand reputation, customer relationships, and other non-physical benefits. In Xero, intangible assets acquired through purchase are recorded using a manual journal so they appear correctly on the balance sheet.
Journal Details
Journal Date: 31 Oct 2025
Journal No: #200
Reference: Acquisition of Goodwill – Intangible Asset
Amount: ₦350,000.00
Narration: Recognition of Goodwill purchased during business acquisition.
Accounts Impacted
Dr Intangible Asset – Goodwill
Cr Credit Card Payable
What Happened
A manual journal was posted to capture the acquisition of Goodwill as an intangible asset. This increases the company’s asset base and records the financial outflow or liability arising from the acquisition. Goodwill is non-depreciable and appears under non-current assets on the Balance Sheet.
Key Skills Demonstrated
Recording intangible asset acquisitions using manual journals
Understanding the accounting treatment of Goodwill
Correctly classifying non-current assets in Xero
Ensuring Balance Sheet accuracy during business acquisitions
Applying proper debit/credit structure for intangible assets
Depreciation Journal – HP Printer (FA-0001)
This screenshot shows the monthly depreciation journal for the HP Office Printer (FA-0001). Depreciation allocates the asset’s cost over its useful life, reflecting the wear-and-tear and ensuring accurate asset valuation on the balance sheet.
Journal Details
Journal Date: 31 Jan 2026
Journal No: #126
Reference: Monthly Depreciation – HP Printer (FA-0001)
Asset Code: FA-0001
Depreciation Amount: ₦4,666.67
Method: Straight-Line
Narration: Monthly depreciation of HP Office Printer
Accounts Impacted
Dr Depreciation Expense – Office Equipment
Cr Accumulated Depreciation – Office Equipment
This records the monthly expense and updates the accumulated depreciation, ensuring financial statements reflect the true value of the asset.
What Happened
A depreciation journal of ₦4,666.67 was recorded for January 2026 to account for the HP Printer’s usage. The straight-line method spreads the asset’s cost evenly over its useful life. This is a standard month-end adjustment for fixed assets in Xero.
Key Skills Demonstrated
Recording fixed asset depreciation accurately in Xero
Applying straight-line depreciation method
Maintaining up-to-date accumulated depreciation balances
Understanding month-end accounting adjustments
Ensuring financial statements reflect true asset values
Bad Debt Journal Entries
This section shows how I manage customer debts that may not be collectible through manual journal entries in Xero. It includes creating provisions for doubtful debts, writing off confirmed bad debts, and recording recoveries of previously written-off debts. Using journals ensures that all these adjustments are accurately reflected in the financial statements.
This process demonstrates my ability to apply accrual accounting principles, maintain accurate accounts receivable balances, and handle credit risks professionally.
Provision for Doubtful Debts Based on Ageing Analysis
This screenshot shows a manual journal created to record the year-end provision for doubtful debts based on an ageing analysis of outstanding customer invoices. Since some invoices are overdue or at risk of non-payment, the business estimates potential losses and records a provision to ensure accounts receivable are not overstated.
This process ensures accurate financial reporting and proper application of accrual accounting principles, reflecting potential bad debts in the financial statements even before they are realized.
Journal Entry Details
Journal Date: 30 Nov 2025
Journal No: #227
Reference: End-of-Year Provision for Doubtful Debts – Ageing Analysis
Amount: ₦251,700
Narration: Year-end provision for doubtful debts based on the ageing analysis of outstanding customer invoices.
Accounts Impacted
Dr Bad Debt Expense (Expense)
Cr Provision for Doubtful Debts (Contra-Asset)
This records the estimated potential loss and reduces the net value of accounts receivable to reflect the risk of non-collection.
What Happened: Based on the ageing analysis, I identified overdue invoices and applied the company’s provision policy (50% for debts over 2 months, 10% for debts over 1 month, 0% for less than 1 month). The journal entry ensures that the financial statements reflect a realistic value of receivables and anticipated losses at year-end.
Key Skills Demonstrated
Applying accrual accounting for potential losses
Calculating provisions based on ageing analysis
Maintaining accurate accounts receivable balances
Using manual journals in Xero to adjust for doubtful debts
Ensuring financial statements are reliable and compliant
Reduction of Provision for Doubtful Debts (Due to Improved Customer Recovery)
This screenshot shows the manual journal created to reduce the Provision for Doubtful Debts following improved collections from customers (PrimeTek, Nexa, etc.). Because customer receipts have reduced the expected credit losses, I reverse the excess provision so the allowance reflects current risk.
This keeps the balance sheet and P&L accurate.
Calculation Recap (from ageing & collection events)
Opening provision (31 Jan 2026): ₦1,031,250
Recalculated target provision (31 Mar 2026): ₦595,250
Reduction required: ₦1,031,250 − ₦595,250 = ₦436,000
Journal Entry Details
Journal Date: 31 Mar 2026
Journal No: #336
Reference: Reduction in Provision for Doubtful Debts – March 2026
Amount: ₦436,000
Narration: Reverse excess provision following customer recoveries and updated ageing analysis (31 March 2026).
Accounts Impacted
Dr Provision for Doubtful Debts (Contra-Asset) — ₦436,000
Cr Bad Debts Expense (Income Statement / Expense) — ₦436,000
(This entry reduces the contra-asset allowance and reduces the previously recognized bad debt expense — reflecting that some of the earlier estimated loss is no longer required.)
What Happened
After customer payments and reassessment of outstanding invoices, the required allowance for doubtful debts decreased from ₦1,031,250 to ₦595,250. I posted a manual journal on 31 March 2026 to clear the excess ₦436,000 from the provision. This reverses part of the earlier expense recognition and aligns the provision with the updated credit risk.
Impact on Financial Statements
Profit & Loss (March 2026): Bad Debts Expense decreases by ₦436,000 (improves net profit for the period).
Balance Sheet (31 Mar 2026): Net Accounts Receivable increases (because Provision for Doubtful Debts is reduced), reflecting improved expected recoveries.
Key Skills Demonstrated
Reassessing provisions using updated ageing analysis and actual receipts
Posting correct reversing journals for allowance adjustments
Maintaining accurate contra-asset balances and P&L integrity
Ensuring audit-ready documentation and traceable narration
Ageing Analysis for Bad Debt Provision
This screenshot shows how I assess and calculate the Provision for Doubtful Debts using an ageing analysis of outstanding invoices. I categorize receivables based on how long they have been unpaid and apply the company’s policy (e.g., 50% for debts over 2 months, 10% for debts over 1 month, and 0% for less than 1 month). The analysis helps me determine the total provision required, identify invoices to write off as bad debts, and maintain accurate accounts receivable balances.
It also ensures the financial statements reflect a realistic picture of potential losses while demonstrating careful credit risk management and application of accrual accounting principles.
Page updated
Google Sites
Report abuse