Opening Entries in Journal Proper

 

Journal proper refer to the special types of journals which occur occasionally. Journal proper contents opening entries and closing entries.

Opening Entries

Opening entries are to be prepared at the beginning of the given period.

There are two types of opening entries.

They are for new starting company and existing company.

 

FOR NEW BUSINESS

When a new business is started, the owner of the business may bring some money and assets into the firm.

For new starting business, all the invested items are debited and capital is credited.

 

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

 

PROBLEM: 1

Following extracted information is given to you:

Mr Gopal started his business on 15^th July 2020 with cash $/₹/Rs 150,000; equipment Rs 100,000; goods Rs 200,000.

Required: Opening entry     

[Answer: Capital = 450,000]

SOLUTION:

Opening Journal Entry

Date	Particulars		JF	Amount Dr	Amount Cr
2013 July 15	Cash account Equipment account Stock account           To Capital account (Being- business started with cash, equipment and stock)	Dr Dr Dr		150,000 100,000 200,000	450,000

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FOR AN EXISTING BUSINESS

In the case of continuing business, we are required to pass an opening journal entry in the new books.

All the assets and liabilities of previous year are recorded in this entry.

This entry is known as ‘opening entry’.

          Rule: Debit:  all assets

                   Credit: all liabilities

                   Credit:  capital account (balancing figure)

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

PROBLEM: 2

The following extracted data is given by AK Traders as on 31^st December 2019:

The assets and liabilities were as follows: Cash $/₹/Rs 5,000; Bank Rs 135,000; Equipment Rs 400,000; stock 615,000; sundry debtors Rs 9,000; sundry creditors Rs 150,000.

Required: Opening entry

[Answer: Capital = 10,14,000]

SOLUTION:

Opening Journal Entry

Date	Particulars		LF	Amount Dr	Amount Cr
2019 1 Jan	Cash account Bank account Equipment account Stock account Sundry debtors account           To Sundry creditors account            To Capital account  (b/f) (Being- assets and liabilities brought down, capital as balance figure)	Dr Dr Dr Dr Dr		5,000 1,35,000 4,00,000 6,15,000 9,000	1,50,000 10,14,000

 

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PROBLEMS  AND  ANSWERS

 

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

Basic Problem: 1

The following extracted data of balance sheet is given by of AVM Suppliers:

Capital Creditors Debtors Plant

550,000 194,500 225,000 200,000

Closing stock Reserve fund Land and building Cash at bank

45,000  200,000 450,000 24,500

Required: Opening entry

 

Basic Problem: 2

BM Impex has flowing extracted data of balance sheet:

Bills payable Debtors Plant Creditors

25,500 215,000 250,000 175,000

Reserve fund Land and building Cash in hand Closing stock

150,000 350,000 24,500 55,000

Required: Opening entry showing capital account

 

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