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How do you record transactions in Xero?

These three forms of manual journals/ledgers demonstrate how business transactions can be represented manually and electronically.

You can record transactions in the traditional accounting forms of manual journals and ledgers as well as Excel. Once you’ve done that, it is time to record these transactions in Xero. Let’s try the first two together:

  1. Go to the Dashboard and find the ‘Business Bank Account’, then click the 3 dots to the right and select ‘Receive Money’.

Business Bank Account

2. We need to record the first transaction ‘on 1 Sept 2019, Nicholas contributed $20,000 cash into the business bank account’.

  • Add ‘Nicholas Sterling’ as a new contact in ‘from’
  • enter the transaction date
  • provide a description of the business transaction
  • quantity is 1
  • unit price is $20,000
  • The account is capital as we discussed in the manual journal. In Xero, a similar existing account name is ‘970-Owner A Funds Introduced’ under ‘Equity’.

New Receive Money

3. Click ‘save’ and you complete the first transaction in Xero.

First transaction
4. Let’s do one more transaction together. ‘On 3 Sept, the business purchased an iPad for $500 cash from JB Teck Supplies’. This is another cash transaction. Since we are in the business bank account, to enter the bank transaction, we click ‘+ New Transaction’. Please note this is a ‘New Spend Money’ transaction. You can change it to a ‘New Receive Money’ if it is a cash receive transaction.

It is similar to the previous transaction, you need to:

  • Add/choose ‘JB Tech Supplies’ as a contact
  • enter the correct transaction date
  • provide a description
  • Qty=1
  • unit price $500
  • choose/select an account ‘Office and Computer Equipment’.
  • Note GST automatically applies
  • you need to change the amounts are ‘Tax Inclusive’

Total 500
5. Click ‘save’ and now you complete two transactions.

Second transaction

6.  Carry on recording all the other transactions that affect the bank account. Please make sure the GST is correct.
At the end of the month after recording all cash transactions, your bank account should look like this:

Balance

If you have recorded the transactions in the traditional manual bank ledger, you will find that these bank transactions and bank balance on the screenshot above in Xero are the same.

Bank balance

Another way of recording manual transactions is to use Excel. You will find the bank transactions in Excel and bank balance ’71,270’ on the screenshot above in Xero are the same as well.

excel

These three forms of manual journals/ledgers, Excel and Xero demonstrate how business transactions can be represented manually and electronically.

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