Page 71 - DMGT104_FINANCIAL_ACCOUNTING

Unit 5: Preparation of Journal, Ledger and Balancing

Aug 3 X & Co. Dr. 5,000 Notes
To cash A/c 5,000
Paid cash
(If combined entry is passed)
Aug 3 Purchases A/c Dr. 10,000
To cash A/c 5,000
To X & Co. 5,000
(Goods purchased from X and paid cash)
Aug 5 X & Co. Dr. 200
To Purchases Returns A/c 200
(Goods returned to X)
Aug 10 Cash A/c Dr. 20,000
Y& Co. Dr. 10,000
To sales A/c 30,000
(Goods sold to Y and cash received from him)
If separate entries are made then
Aug 10 Y& Co. Dr. 30,000
To Sales A/c 30,000
(Goods sold to Y)
Aug 10 Cash A/c Dr. 20,000
To Y & co. 20,000
(Cash received from him)
Aug 15 Sales Return A/c Dr. 500
To Y & Co. 500
(Goods returned by Y & Co.)

5.1.3 Opening Journal Entry

The closing balances of accounts of one year are transferred to the next year. In the next year
these balances become the opening balances. After recording the opening balances, the
transactions of the year are recorded. To record the opening balances a Journal entry is passed
which is called opening entry. Suppose in a business there are closing balances of cash of 10,000,
plant 90,000 and capital of 1,00,000, and then opening Journal entry will be as follows:

Assets Account Dr. 90,000
Cash Account Dr. 10,000
To Capital Account 1,00,000

Illustration 3: Pass the necessary opening entry on 1st January, 2006 in the books of Gopinath.
Cash in hand 3,000
Cash at Bank 16,000

Stock in trade 30,000
Furniture & Fittings 5,000
Sundry Debtors 21,000

Sundry Creditors 18,000
Loan from Ganesh & Co. 9,000

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