Opening Entries

Advantages of Journal proper:

         

              As business transactions are classified and recorded in their respective subsidiary books, the following entries are recorded in the journal proper.

a)    Opening Entries:

            The assets or capital brought in should be recorded first in the journal proper and then, it must be posted to the respective accounts in the ledger. Thus, students must remember that before posting any entry in the ledger, it must be recorded first in the journal proper. The entries recorded in this manner are called the opening entries. Such entries should be recorded only in the journal proper. 

Example:

           Suppose Kumar commenced business on January 1^st, 1998 with the assets Rs.10, 000/- in cash, furniture worth Rs. 5,000/-, Machinery worth Rs.4, 000/- and stock worth Rs. 3000/-, He writes journal entries as under.

Solution:

Date	Particular	Ledger Folio	Debit a/c	Credit a/c
1998 Jan. 1St	Cash a/c…………...Dr Furniture a/c………Dr Machinery  a/c…….Dr Stock a/c………..…Dr           To Capital a/c (Being assets brought into the business as capital along with cash)		10,000 5,000 4,000 3,000	22,000

Example:

           The balance sheet of Mr. Ramu as on 31^st December, 1997 is as under shows the opening entries in his book as on 01-01-1998.

                     Balance sheet of Mr. Ramu as on 31-12-1997

Liabilities	Amount	Assets	Amount
Bills Payable        Sundry Creditors Capital	15,000 24,000 41,000	Cash Sundry Debtor Furniture Stock	25,000 15,000 20,000 20,000
	80,000		80,000

Solution:

Date	Particulars	LF	Debit	Credit
1998 Jan 1st	Cash  a/c…………..Dr Sundry Debtors a/c  Dr Stock a/c………..    Dr Furniture a/c …….  Dr    To Bills Payable a/c    To Sundry Creditor  a/c    To Ram’s Capital a/c (Being the balance of the previous year brought into the current year books)		25,000 15,000 20,000 20,000	15,000 24,000 41,000

Example:

             The ledger balance of the accounts of Sunitha and Co as on December 31^st, 1998 is as under. You are required to show the opening entries in their book as on January 1^st, 1999.

          Cash – Rs. 8,000; Cash at Bank – Rs. 10,000; Debtors – Rs. 20,000

Furniture – Rs.12,000; Machinery – Rs. 21,000; Bills Receivable – Rs. 11,000; Building – Rs.15,000; Creditors – Rs. 12,000; Stock – Rs. 5,000; Bills Payable – Rs.6,000; Capital- Rs.84,000/-

Solution:

Date	Particular	LF	Debit	credit
1999 Jan 1st	Cash a/c…………….Dr Bank a/c…………….Dr Debtor a/c…………..Dr Furniture a/c………..Dr Bills Receivable a/c…Dr Machinery a/c……….Dr Building a/c…………Dr Stock a/c ……………Dr        To Creditors  a/c        To Bills Payable a/c        To Capital a/c (Being the balance of previous year brought into the current year books)		8,000 10,000 20,000 12,000 11,000 21,000 15,000 5,000	12,000 6,000 84,000

Note: 1) in the entry of the journal proper, if two or more debit or credit items are shown, they are called compound entries.

          2) It should be noted that in order to facilitate the recording of the opening entries cash items are included in the journal proper.