| name | finance-journal-entries |
| department | finance-controller |
| description | Use when constructing a GAAP/IFRS journal entry from facts. Covers debit/credit selection, account coding, sub-ledger impact, and supporting memo. Do not use for reconciliation (use finance-reconciliation) or close orchestration (use finance-close-checklist). |
| version | 1 |
| triggers | ["journal entry","JE","posting","accrual","prepaid","reclass","reversing entry","debit","credit","account coding","sub-ledger"] |
Finance Journal Entries
Purpose
Construct a GAAP- or IFRS-compliant journal entry from a transaction or event. The deliverable is a posting-ready entry — full account coding, balanced amounts, reversal logic, and a supporting memo that an auditor can re-perform without follow-up questions.
Scope Constraints
- Produces the journal entry, supporting memo, and pre-post review notes; does not actually post to the GL.
- Covers single-event JE construction; does not orchestrate the close cycle (use finance-close-checklist) or reconcile balances (use finance-reconciliation).
- Does not opine on whether the transaction should occur — the input is a transaction or event whose accounting treatment is being captured.
Inputs
- Transaction description (parties, amounts, currency, effective date)
- Underlying contract or supporting document reference
- Entity, location, department, and any required dimensions
- Applicable accounting standard (GAAP or IFRS) and the firm's accounting policy
- Prior treatment of similar transactions (if any) for consistency
- Period (open / closed / pending) and intended posting date
Input Sanitization
All inputs are read-only artifacts. No user-supplied values are interpolated into commands or file paths. Account numbers are validated against the chart of accounts and entity codes against the entity master before use.
Procedure
Progress Checklist
Step 1: Identify the Transaction and Applicable Standard
State the transaction in one paragraph: parties, economic substance, effective date, amount, currency. Identify the controlling standard with a specific subsection cite (e.g., ASC 606-10-25-1, ASC 842-20-25-1, IFRS 15.31, IFRS 16.22). If multiple standards interact (e.g., revenue + financing component), cite each.
Step 2: Determine Debit and Credit Accounts with Full Coding
For every line, provide full coding:
- Entity
- Location
- Department / cost center
- Account number and name
- Sub-ledger reference (customer, vendor, asset, project) where applicable
- Any custom dimensions per the firm's COA
Use the natural-balance side (debit for assets/expenses, credit for liabilities/equity/revenue) unless deliberately reversing. Note whether each line hits a sub-ledger control account.
Step 3: Compute Amounts (Including FX Translation)
Compute amounts gross or net per the standard's measurement rule. For foreign-currency transactions, apply ASC 830 (or IAS 21):
- Transaction date spot rate for non-monetary items at initial measurement
- Period-end rate for monetary items at remeasurement
- Cumulative translation adjustment (CTA) routed to OCI for translation of foreign operations
Confirm debits = credits before proceeding. Show the arithmetic.
Step 4: Determine Recurring / Reversing / One-Time and Reversal Date
Classify the entry:
- One-time — single posting; no reversal
- Reversing — accrual or estimate reversed in the next period (specify reversal date)
- Recurring — same template posts each period (specify cadence)
- Adjusting — corrects a prior posting (cite the original JE reference)
Step 5: Draft Supporting Memo with Citations
Memo template:
- Background — one paragraph on the transaction
- Accounting analysis — apply the cited standard to the facts
- Conclusion — the recognition / measurement decision
- Journal entry — reproduce the JE inline
- Evidence — pointers to contract, invoice, schedule, or third-party confirmation
Step 6: Pre-Post Review
Verify:
- Debits = credits (to the cent)
- Period is open and matches the intended posting date
- Reversal date (if any) lands in an open period
- Sub-ledger impact is intended (control account moves with sub-ledger)
- Trial-balance roll-forward direction is correct (no sign-flip surprises)
Compaction resilience: If context was lost during a long session, re-read the Inputs section to reconstruct the transaction, check the Progress Checklist for completed steps, then resume from the earliest incomplete step.
Handoff
- If the entry resolves a reconciling item, hand back to finance-reconciliation so the recon document references the new JE.
- If the entry is part of a close-cycle accrual run, hand back to finance-close-checklist for inclusion in the close package.
- If the underlying recognition decision is contested or sets new policy, escalate to the Controller's main deliberation thread for a recognition-policy review.
Output Format
# Journal Entry: [Short Title] — [Period]
## Header
- **Entity:** [entity]
- **Period:** [period — and posting date]
- **Standard:** [ASC / IFRS cite — section and paragraph]
- **Type:** [one-time / reversing (reversal date) / recurring (cadence) / adjusting (original JE ref)]
- **Currency:** [currency; FX rate and source if non-functional]
## Lines
| # | Entity | Location | Dept | Account | Sub-Ledger | Debit | Credit | Description |
|---|--------|----------|------|---------|------------|-------|--------|-------------|
| 1 | ... | ... | ... | ... | ... | [amt] | | ... |
| 2 | ... | ... | ... | ... | ... | | [amt] | ... |
| **Totals** | | | | | | **[sum]** | **[sum]** | |
## Reversal
- **Reverse:** [yes / no]
- **Reversal date:** [date or N/A]
## Supporting Memo
**Background:** [one paragraph]
**Accounting analysis:** [apply cited standard to facts]
**Conclusion:** [recognition / measurement decision]
**Evidence:** [contract / invoice / schedule / confirmation pointers]
## Pre-Post Review
- [ ] Debits = credits
- [ ] Period open; posting date confirmed
- [ ] Reversal date (if any) in open period
- [ ] Sub-ledger impact intended
- [ ] Roll-forward direction verified
**Preparer:** [name] [date]
**Reviewer:** [name] [date]
Quality Checks
Evolution Notes
