Opening Entries Once the financial position of a business is determined in the form of a balance sheet, there is a need to record it in permanent form. The journal is the book of original entry. The journal is a record in which accounting information is recorded in chronological order. A source document is the business paper from which a journal entry is made. These may include sales slips, receipts, cash register tapes, cheque stubs, invoices, purchase orders, or vouchers. An opening entry is the entry that records the beginning balance sheet in the general journal. Posting to the Ledger An efficient method must be used to record day-by-day changes which affect a company s financial position. An account is a form used by business to sort and summarize changes caused by transactions. A ledger is a group of accounts arranged in account number sequence. The chart of accounts is a list of account titles and numbers showing the location of the accounts in the ledger. Opening an account is writing the account title and number on the heading of an account form. Posting is transferring information from journal entries to ledger accounts. Posting sorts the information, so that all activities affecting a single account are brought together in one place. Post referencing in the journal indicates the account number to which the entry was posted in the ledger. Similarly, the post reference column in the ledger shows the page number of the journal to which the entry was posted. Remember: post referencing is done only when an item in the journal is
actually posted to a ledger account. A detailed example follows of the journalized opening entry being posted into the ledger account for the asset, Cash. This example also shows the opening entry as it would appear in the ledger for a liability account, Bank Loan Payable; and a capital account, T. Summers, Capital. Page 1 General Journal DATE 20 EXPLANATION POST REF. Dec. 31 Cash 11 5 000.00 Supplies 800.00 Furniture & Fixtures 5 000.00 Equipment 3 000.00 Acme Plumbing Supply 2 000.00 Bank Loan Payable 22 3 000.00 T. Summers, Capital 31 8 800.00 Dec. 31, balance sheet Account Cash Account No. 11 DATE 20 EXPLANATION POST REF. Dec. 31 Balance GJ1 5 000.00 5 000.00 (Dr) Account Bank Loan Payable Account No. 22 DATE 20 EXPLANATION POST REF. Dec. 31 Balance GJ1 3 000.00 3 000.00 (Cr) Account T. Summers, Capital Account No. 31 DATE 20 EXPLANATION POST REF. Dec. 31 Balance GJ1 8 800.00 8 800.00 (Cr)
Quick Check: Using the information below, prepare the opening journal entries and post them to their ledgers. Ensure that they balance. 1010 Bank $2,800 1050 Accounts Receivable 12,800 1320 Office Supplies 700 1880 Land 60,000 1860 Building 179,545 1820 Equipment 11,500 1840 Automobiles 14,320 2115 Accounts Payable 500 2120 Bank Loan 170,000 2370 GST Payable 2,500 2375 GST Recoverable 0 3010 Chester Field, Capital 13,930 3015 Chester Field, Drawings 25,000 4200 Sales Revenue 186,685 5615 Advertising Expense 5,500 5610 Automobile Expense 9,000 5690 Bank Charges Expense 7,600 5790 Light and Heat Expense 3,200 5740 Miscellaneous Expense 700 5780 Telephone Expense 950 5410 Wages Expense 40,000
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