What accounts should I use to post the opening balances in Sage for the following?
I come across this practical question when going through my Sage course. Enter the following opening balance journal as provided by the accountant. Nominal description Nominal code Machinery 35000 (dr) Machinery Depreciation 15000(cr) Equipment 20000 (dr) Equipment Depreciation 5000 (cr) Opening stock 2500(dr) Prepayment 500(dr) Bank current a/c 2254.24(dr) Petty Cash 100(dr) PAYE liability 334.36(cr) NI liability 519.88(cr) Loan 25000(cr) Capital account 14500(cr) I am not completely sure how this works so I would appreciate if someone could explain all this to me. I know that when using the journal there should be 2 entries one on the debit side and one on the credit side. What I don't know is what is the correspondig account for each nominal account listed. Thank you in advance. Kind regards, Cristina
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Answer 1 :
There is nothing set in stone that determines the number f entries for the debit side or credit side. The rule is that when making a journal entry the total debits minus total credits must equal zero. You could have an entry that has 100 debit items totaling $500 and only one credit item totaling $500, but the result is $500 - $500 = 0. If I'm understanding your question, the accounts listed above are situations. Also, to show an increase in an asset, expense, or withdrawl you have to debit that account, a decrease is a credit. The exception is when you have an asset contra account. For example, accumulated depreciation is increased with a credit and decreased with a debit. This account pairs with either equipment or building to reduce that account over time. For liabilities, equity, and revenues it's reversed. Credits increase those accounts and debits decrease them. I'll do one because there is certain information left out of the question and you can record things a few different ways. For example: Machinery 35000 (dr) If machinery is debited 35000, then the account has increased. Since there has to also be a credit somewhere, you can assume that either cash was used or you are invoiced. When cash is used: debit machinery 35,000 --- credit cash 35,000 When purchased on account is used: debit machinery 35,000 ---credit accounts payable 35,000 Hope this helps.
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