I keep seeing the question “How do I post a manual journal to a cash account in Xero?” The simple answer is YOU CAN’T!
Xero is programmed to not allow transactions to be coded to a “Bank Account”. So the question is, how to post an adjustment to cash or your credit card accounts?
Xero is built around “bank feeds” and the ease of coding/reconciling of the bank and credit card accounts. You set up the bank feed to pull the transactions from your bank. The key is in the setting of the beginning balance, this ensures that the “statement” transactions tie out to the bank balance.
Once the statement balance matches the bank balance, we can get to work. Each and every transaction will populate the Xero cash and credit card accounts bank feeds and the Xero bank statement balance will reflect the actual bank balance. Interest, bank fees, merchant deposits, rent checks. They all flow through the bank feed.
So, as you can see, there is no reason to post a journal entry to cash. If the need arises, you can always record adjustments to cash by using the built in “Spend Money” and “Receive Money” transactions.
Next, let me tell you there is no Xero cash account bank reconciliation, well not in the traditional way. If you have set up your bank account correctly in Xero and record your Xero cash transactions correctly, the account should reconcile to the bank. All you will need to do is run the Reconciliation Report. Set the date to the bank statement ending date, update and run. Compare the statement balance from the report to the bank statement ending balance. They balance, you are good to go. If not, check back here for troubleshooting tips, a future post.