Journal entries

As an asset subledger, Hardfin automatically generates journal entries (JEs) to record inventory and fixed asset transactions in your accounting system. These entries provide a complete audit trail of asset movements and ensure accurate financial reporting.

Overview

Hardfin produces eight types of journal entries each month. Each operational journal entry captures a specific type of transaction (purchases, sales, deployments, depreciation, etc.), while the adjustment entry reconciles any differences between Hardfin's operational balances and your locked general ledger balances.

Seven operational journal entries - Record monthly transactions (broken down by SKU)

• JE1: Inventory purchases

• JE2: Inventory to fixed asset capitalization

• JE3: Depreciation expense

• JE4: Inventory sales

• JE5: Inventory scrap

• JE6: Fixed asset sales

• JE7: Fixed asset scrap

One adjustment journal entry - True up prior-period differences (without SKU breakdown)

• JE8: Prior-period adjustments

Journal entry naming convention

All Hardfin journal entries follow a consistent naming pattern:

External ID format: HF-JE-[TYPE]-YYYY-MM (ex: "HF-JE-INV-NEW-2025-07")

Memo format: Hardfin journal entry: [Description] (MMMM YYYY) (ex: "Hardfin journal entry: Inventory purchases (July 2025)")

Date: YYYY-MM-DD using the last day of the month for operational entries, first day of the month for adjustment entries (ex: "2025-07-31" for inventory purchases and "2025-07-01" for prior-period adjustments for July 2025)

Skipping immaterial entries

If a report shows no material movement in a transaction area for the month, Hardfin automatically skips that journal entry. This reduces posting volume while maintaining complete records for active transaction types.

JE1: Inventory purchases

External ID: HF-JE-INV-NEW-YYYY-MM

Memo: Hardfin journal entry: New inventory (MMMM YYYY)

Purpose: Record new inventory acquisitions and credit the inventory clearing account. In some accounting systems, the inventory clearing account is sometimes known as Goods Received Not Invoiced (GRNI) or Goods Received Invoice Received (GRIR). The clearing account is used to track the difference between the inventory received by the warehouse and the inventory invoiced by the vendor.

Ledger accounts

• Debit: Inventory

• Credit: Inventory clearing account (GRIR/GRNI)

Cost basis considerations

If using simple cost basis, the inventory balance reflects the default cost basis of newly entered inventory.

If using advanced cost basis, the inventory balance reflects only the acquisition costs of your asset cost basis (equipment, materials, labor, overhead, freight, taxes, duties, and capitalizable interest), excluding deployment costs which are capitalized later.

Example

External ID	Memo	Date	Account	Description	Debit ($)	Credit ($)
HF-JE-INV-NEW-2025-07	Hardfin journal entry: New inventory (July 2025)	2025-07-31	1403 Inventory	MON-500 (Premium Monitor)	12,000.00
HF-JE-INV-NEW-2025-07	Hardfin journal entry: New inventory (July 2025)	2025-07-31	1403 Inventory	CPUT-100 (CPU Tower)	8,500.00
HF-JE-INV-NEW-2025-07	Hardfin journal entry: New inventory (July 2025)	2025-07-31	1403 Inventory	ADMOD-1 (Addon Module)	4,200.00
HF-JE-INV-NEW-2025-07	Hardfin journal entry: New inventory (July 2025)	2025-07-31	1499 Inventory Clearing	—		24,700.00

Note on payables. Your accounts payable (A/P) system should credit inventory purchases received by invoice to the same inventory clearing account. This ensures the clearing account properly tracks the timing difference between receiving inventory and receiving the invoiceJE2: Inventory to fixed asset capitalization

External ID: HF-JE-INV-FA-YYYY-MM

Memo: Hardfin journal entry: Inventory to fixed assets (MMMM YYYY)

Purpose: Transfer inventory to fixed assets when equipment is deployed to customers, capitalizing deployment costs as part of the asset basis. The capitalized deployment costs account (sometimes called "overhead applied") is typically a contra-expense account that offsets operating expenses.

Ledger accounts

• Debit: Fixed assets

• Credit: Inventory

• Credit: Capitalized deployment costs [only with advanced cost basis]

Cost basis considerations

If using simple cost basis, assets are transferred at their simple inventory cost with no additional capitalized deployment costs.

If using advanced cost basis, the fixed asset balance includes both acquisition costs and deployment costs (outbound freight, installation, setup), which are capitalized at the time of deployment.

Example

External ID	Memo	Date	Account	Description	Debit ($)	Credit ($)
HF-JE-INV-FA-2025-07	Hardfin journal entry: Inventory to fixed assets (July 2025)	2025-07-31	1501 Fixed Assets	MON-500 (Premium Monitor)	8,000.00
HF-JE-INV-FA-2025-07	Hardfin journal entry: Inventory to fixed assets (July 2025)	2025-07-31	1501 Fixed Assets	CPUT-100 (CPU Tower)	6,000.00
HF-JE-INV-FA-2025-07	Hardfin journal entry: Inventory to fixed assets (July 2025)	2025-07-31	1501 Fixed Assets	ADMOD-1 (Addon Module)	2,000.00
HF-JE-INV-FA-2025-07	Hardfin journal entry: Inventory to fixed assets (July 2025)	2025-07-31	1403 Inventory	MON-500 (Premium Monitor)		7,600.00
HF-JE-INV-FA-2025-07	Hardfin journal entry: Inventory to fixed assets (July 2025)	2025-07-31	1403 Inventory	CPUT-100 (CPU Tower)		5,700.00
HF-JE-INV-FA-2025-07	Hardfin journal entry: Inventory to fixed assets (July 2025)	2025-07-31	1403 Inventory	ADMOD-1 (Addon Module)		1,900.00
HF-JE-INV-FA-2025-07	Hardfin journal entry: Inventory to fixed assets (July 2025)	2025-07-31	6009 Capitalized Deployment Expenses	—		800.00

Policy context. Many companies capitalize personnel and overhead costs directly attributable to preparing equipment for deployment and its intended use (per ASC 360). The capitalized amount is recorded as an increase to property and equipment, with an offsetting credit to the capitalized deployment cost account (a contra-expense account presented within operating expenses).

JE3: Depreciation expense

External ID: HF-JE-DEPR-YYYY-MM

Memo: Hardfin journal entry: Depreciation (MMMM YYYY)

Purpose: Record monthly depreciation expense for fixed assets based on their cost basis and useful life.

Ledger accounts

• Debit: Depreciation expense

• Credit: Accumulated depreciation

Example

External ID	Memo	Date	Account	Description	Debit ($)	Credit ($)
HF-JE-DEPR-2025-07	Hardfin journal entry: Depreciation (July 2025)	2025-07-31	7001 Depreciation	MON-500 (Premium Monitor)	400.00
HF-JE-DEPR-2025-07	Hardfin journal entry: Depreciation (July 2025)	2025-07-31	7001 Depreciation	CPUT-100 (CPU Tower)	300.00
HF-JE-DEPR-2025-07	Hardfin journal entry: Depreciation (July 2025)	2025-07-31	7001 Depreciation	ADMOD-1 (Addon Module)	150.00
HF-JE-DEPR-2025-07	Hardfin journal entry: Depreciation (July 2025)	2025-07-31	1550 Accumulated Depreciation	—		850.00

JE4: Inventory sales

External ID: HF-JE-INV-SALE-YYYY-MM

Memo: Hardfin journal entry: Inventory to sale (MMMM YYYY)

Purpose: Record the cost of goods sold when inventory units are sold directly without being deployed as fixed assets.

Ledger accounts

• Debit: Cost of goods sold

• Credit: Inventory

Example

External ID	Memo	Date	Account	Description	Debit ($)	Credit ($)
HF-JE-INV-SALE-2025-07	Hardfin journal entry: Inventory to sale (July 2025)	2025-07-31	5010 Cost of Goods Sold	MON-500 (Premium Monitor)	6,000.00
HF-JE-INV-SALE-2025-07	Hardfin journal entry: Inventory to sale (July 2025)	2025-07-31	5010 Cost of Goods Sold	CPUT-100 (CPU Tower)	4,000.00
HF-JE-INV-SALE-2025-07	Hardfin journal entry: Inventory to sale (July 2025)	2025-07-31	5010 Cost of Goods Sold	ADMOD-1 (Addon Module)	2,500.00
HF-JE-INV-SALE-2025-07	Hardfin journal entry: Inventory to sale (July 2025)	2025-07-31	1403 Inventory	—		12,500.00

Note on revenue recognition and invoicing. Your accounts receivable (A/R) system should separately record the revenue side of inventory sales by debiting accounts receivable and crediting hardware sales revenue.

JE5: Inventory scrap

External ID: HF-JE-INV-SCRAP-YYYY-MM

Memo: Hardfin journal entry: Inventory to scrap (MMMM YYYY)

Purpose: Write off inventory units that are scrapped or salvaged, recording the loss from disposing of inventory.

Ledger accounts

• Debit: Inventory write-off expense

• Credit: Inventory

Example

External ID	Memo	Date	Account	Description	Debit ($)	Credit ($)
HF-JE-INV-SCRAP-2025-07	Hardfin journal entry: Inventory to scrap (July 2025)	2025-07-31	6501 Inventory Write-Offs	MON-500 (Premium Monitor)	1,800.00
HF-JE-INV-SCRAP-2025-07	Hardfin journal entry: Inventory to scrap (July 2025)	2025-07-31	6501 Inventory Write-Offs	ADMOD-1 (Addon Module)	1,200.00
HF-JE-INV-SCRAP-2025-07	Hardfin journal entry: Inventory to scrap (July 2025)	2025-07-31	1403 Inventory	—		3,000.00

Note on salvage proceeds. If you invoice for scrapped inventory salvage value, your A/R system should debit accounts receivable and credit the inventory write-off account. If your system can only credit sales revenue, use a manual journal entry to reclassify by debiting hardware sales revenue and crediting the inventory write-off account for consistent in-period treatment.

JE6: Fixed asset sales

External ID: HF-JE-FA-SALE-YYYY-MM

Memo: Hardfin journal entry: Fixed assets to sale (MMMM YYYY)

Purpose: Record the disposal of fixed assets through sale, including the elimination of the asset cost basis and accumulated depreciation, and recognition of gains or losses.

Ledger accounts

• Debit: Asset disposal clearing

• Debit: Accumulated depreciation

• Debit: Loss on disposal [only if sale price is below book value]

• Credit: Fixed assets

• Credit: Gain on disposal [only if sale price exceeds book value]

Example (with both gain and loss)

External ID	Memo	Date	Account	Description	Debit ($)	Credit ($)
HF-JE-FA-SALE-2025-07	Hardfin journal entry: Fixed assets to sale (July 2025)	2025-07-31	1299 Asset Disposal Clearing	MON-500 (Premium Monitor)	12,000.00
HF-JE-FA-SALE-2025-07	Hardfin journal entry: Fixed assets to sale (July 2025)	2025-07-31	1550 Accumulated Depreciation	MON-500 (Premium Monitor)	9,000.00
HF-JE-FA-SALE-2025-07	Hardfin journal entry: Fixed assets to sale (July 2025)	2025-07-31	1501 Fixed Assets	MON-500 (Premium Monitor)		20,000.00
HF-JE-FA-SALE-2025-07	Hardfin journal entry: Fixed assets to sale (July 2025)	2025-07-31	7109 Gain on Disposal	MON-500 (Premium Monitor)		1,000.00
HF-JE-FA-SALE-2025-07	Hardfin journal entry: Fixed assets to sale (July 2025)	2025-07-31	1299 Asset Disposal Clearing	CPUT-100 (CPU Tower)	8,000.00
HF-JE-FA-SALE-2025-07	Hardfin journal entry: Fixed assets to sale (July 2025)	2025-07-31	1550 Accumulated Depreciation	CPUT-100 (CPU Tower)	6,000.00
HF-JE-FA-SALE-2025-07	Hardfin journal entry: Fixed assets to sale (July 2025)	2025-07-31	1501 Fixed Assets	CPUT-100 (CPU Tower)		15,000.00
HF-JE-FA-SALE-2025-07	Hardfin journal entry: Fixed assets to sale (July 2025)	2025-07-31	7009 Loss on Disposal	CPUT-100 (CPU Tower)	1,000.00

Note on asset disposal clearing. The asset disposal clearing account tracks the sale proceeds and must clear to zero each period after sales invoices and disposal journal entries are posted. Your A/R system should credit sold fixed assets to this clearing account. If your invoicing system can only credit sales revenue, either set the disposal clearing account in Hardfin to debit sales revenue directly (noting this may cause a period mismatch), or use a manual journal entry to reclassify by debiting sales revenue and crediting the asset disposal clearing account for consistent in-period treatment.

JE7: Fixed asset scrap

External ID: HF-JE-FA-SCRAP-YYYY-MM

Memo: Hardfin journal entry: Fixed assets to scrap (MMMM YYYY)

Purpose: Write off fixed assets that are scrapped or salvaged at end of life, recording gains or losses from disposal.

Ledger accounts

• Debit: Asset disposal clearing

• Debit: Accumulated depreciation

• Debit: Loss on disposal [only if salvage value is below book value]

• Credit: Fixed assets

• Credit: Gain on disposal [only if salvage value exceeds book value]

Example

External ID	Memo	Date	Account	Description	Debit ($)	Credit ($)
HF-JE-FA-SCRAP-2025-07	Hardfin journal entry: Fixed assets to scrap (July 2025)	2025-07-31	1299 Asset Disposal Clearing	ADMOD-1 (Addon Module)	1,500.00
HF-JE-FA-SCRAP-2025-07	Hardfin journal entry: Fixed assets to scrap (July 2025)	2025-07-31	1550 Accumulated Depreciation	ADMOD-1 (Addon Module)	4,000.00
HF-JE-FA-SCRAP-2025-07	Hardfin journal entry: Fixed assets to scrap (July 2025)	2025-07-31	7009 Loss on Disposal	ADMOD-1 (Addon Module)	500.00
HF-JE-FA-SCRAP-2025-07	Hardfin journal entry: Fixed assets to scrap (July 2025)	2025-07-31	1501 Fixed Assets	ADMOD-1 (Addon Module)		6,000.00

Note on asset disposal clearing. The same clearing account principles apply for scrapped fixed assets as for sales. The clearing account must clear to zero each period and your invoicing for salvage proceeds should credit this account. If your system can only credit sales revenue, use one of the two reclassification approaches described in JE6.

JE8: Prior-period adjustments

External ID: HF-JE-ADJUST-YYYY-MM

Memo: Hardfin journal entry: Prior-period adjustments (MMMM YYYY)

Purpose: True up any differences between Hardfin's operational balances and the locked general ledger from the previous month close, capturing adjustments to inventory, fixed assets, deployment costs, depreciation, and disposals.

Date: First day of the posting month (e.g., 2025-07-01 for July adjustments)

Ledger accounts: All accounts used in operational journal entries may appear in the adjustment entry

Example:

External ID	Memo	Date	Account	Description	Debit ($)	Credit ($)
HF-JE-ADJUST-2025-07	Hardfin journal entry: Prior-period adjustments (July 2025)	2025-07-01	1403 Inventory	Net change in inventory balances (adjustments from values locked June 30, 2025)		5,700.00
HF-JE-ADJUST-2025-07	Hardfin journal entry: Prior-period adjustments (July 2025)	2025-07-01	1499 Inventory Clearing	Net change in goods received not invoiced (adjustments from values locked June 30, 2025)		6,000.00
HF-JE-ADJUST-2025-07	Hardfin journal entry: Prior-period adjustments (July 2025)	2025-07-01	5010 Cost of Goods Sold	Net change in cost of goods sold (adjustments from values locked June 30, 2025)	2,500.00
HF-JE-ADJUST-2025-07	Hardfin journal entry: Prior-period adjustments (July 2025)	2025-07-01	6501 Inventory Write-Offs	Net change in inventory write-offs (adjustments from values locked June 30, 2025)	1,200.00
HF-JE-ADJUST-2025-07	Hardfin journal entry: Prior-period adjustments (July 2025)	2025-07-01	1501 Fixed Assets	Net change in fixed asset cost basis (adjustments from values locked June 30, 2025)		19,500.00
HF-JE-ADJUST-2025-07	Hardfin journal entry: Prior-period adjustments (July 2025)	2025-07-01	6009 Capitalized Deployment Costs	Net change in capitalized deployment overhead allocations (adjustments from values locked June 30, 2025)		2,000.00
HF-JE-ADJUST-2025-07	Hardfin journal entry: Prior-period adjustments (July 2025)	2025-07-01	7001 Depreciation	Net change in depreciation expense (adjustments from values locked June 30, 2025)	200.00
HF-JE-ADJUST-2025-07	Hardfin journal entry: Prior-period adjustments (July 2025)	2025-07-01	1550 Accumulated Depreciation	Net change in accumulated depreciation (adjustments from values locked June 30, 2025)	12,300.00
HF-JE-ADJUST-2025-07	Hardfin journal entry: Prior-period adjustments (July 2025)	2025-07-01	1299 Asset Disposal Clearing	Net change in asset disposal clearing balances (adjustments from values locked June 30, 2025)	13,500.00
HF-JE-ADJUST-2025-07	Hardfin journal entry: Prior-period adjustments (July 2025)	2025-07-01	7109 Gain on Disposal	Net change in gains recognized on fixed asset disposals (adjustments from values locked June 30, 2025)		1,000.00
HF-JE-ADJUST-2025-07	Hardfin journal entry: Prior-period adjustments (July 2025)	2025-07-01	7009 Loss on Disposal	Net change in losses recognized on fixed asset disposals (adjustments from values locked June 30, 2025)	4,500.00

How adjustments work. Hardfin locks balances by account and SKU internally for detailed tracking and analysis. However, the adjustment journal entry aggregates these changes to account-level totals without SKU breakdown. The detailed breakdown remains available in Hardfin for audit and analysis purposes.