Principles of Accounting: General Journal opening new books entries

////Principles of Accounting: General Journal opening new books entries

Principles of Accounting: General Journal opening new books entries

ZIMSEC O Level Principles of Accounts Notes: General Journal opening new books entries

  • This is a solution to a question found here
  • One of the uses of the Journal is to create a new set of books when a propieter decides to move on to double entry and keeping a proper set of accounts
  • Now we will present the solution:

a) Capital can be calculated using the accounting equation:

  • The equation is also known as the balance sheet equation
  • It states that Capital=Assets-Liabilities
  • You should note that the equation can be changed to find any variable as long as the other two are known
  • This can be done by changing the subject of the formula
  • In this case first you need to find the total amount of assets:
AssetsAmount
Motor Van3700
Fixtures1800
Stock4200
Debtors
140
Bank860
Cash65
Total

10765


  • Our creditors are:
  • 129+410=539
  • So our Capital would be:
  • 10765-539
  • $10 226

b) Since 1 July is the date on which P Chiyangwa determined his assets and liabilities and established what they were we will use this as the starting day for our accounts. You need to take the following steps in order to record these entries in the Journal:

  1. Create entries for each asset on the debit side
  2. Create entries for each of these liabilities on the credit side
  3. Open an account for capital and show it as a credit balance

The entries would be:

 Journal Entries  
DateDetailsDrCr
20x7
1 Jul
$$
Van3700
Fixtures1800
Stock4200
Debtors:
  • A Runesu
  • Z Zengeni
  • 95
  • 45
Bank860
Cash65
Creditors:
  • Mohammed Mussa
  • Econet

  • 129
  • 410
Capital10226

10765

10765

c) Now that we have the Journal entries the ledger accounts will be extremely easy to make:

Purchases(Creditor's) Ledger
DRM Mussa AccountCR
DateDetailsAmount($)DateDetailsAmount($)
1 JulBalance129
DREconet AccountCR
DateDetailsAmount($)DateDetailsAmount($)
1 JulBalance410
Debtor's(Sales Ledger) Ledger
DRR Runesu AccountCR
DateDetailsAmount($)DateDetailsAmount($)
1 JulBalance95
DRZ Zengeni AccountCR
DateDetailsAmount($)DateDetailsAmount($)
1 JulBalance45
DRCash BookCR
DateDetailsCash($)Bank($)DateDetailsCash($)Bank($)
1 JulBalance65860
General Ledger
DRMotor Van AccountCR
DateDetailsAmount($)DateDetailsAmount($)
1 JulBalance3700
DRFixtures AccountCR
DateDetailsAmount($)DateDetailsAmount($)
1 JulBalance1800
DRStock AccountCR
DateDetailsAmount($)DateDetailsAmount($)
1 JulBalance4200
DRCapital AccountCR
DateDetailsAmount($)DateDetailsAmount($)
1 JulBalance10226
  • Now in an exercise/exam the exact items might differ from this but the principles are the same

To access more topics go to the Principles of Accounts Notes.

 

By |2017-07-25T12:06:20+00:00July 25th, 2017|Notes, Ordinary Level Notes, Principles of Accounts Notes|Comments Off on Principles of Accounting: General Journal opening new books entries

About the Author:

He holds an Honours in Accountancy degree from the University of Zimbabwe. He is passionate about technology and its practical application in today's world.
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