How do you make an excell spreadsheet that automatically averages the latest 12 enteries and ignores data entered before that?

Assuming that your entries are in Column B from Row 1 onwards, put this formula in cell C12:

=IF(B12>0,AVERAGE(B1:B12),"")

Use the Fill Handle to drag the formula as far down the worksheet as you want and it will automatically increment to B2:B13, B3:B14, etc. Nothing will appear in a cell in Column C until the cell to its left contains data.