When entering journal entries, how do you show opening balances? For example, If at the beginning of the month I have $100 in supplies, I purchase $700 throughout the year, and I have $400 remaining at the end of the year, how would I show this whole transaction?

CaptainForest

You don't show opening balance in the journal entries. Only in the ledgers.

In your example, the Journal entries you would have to make are:
Dr. Supplies 700
Cr. Cash 700

Dr. Supplies Expense 400 (100+700-400)
Cr. Supplies 400

student007

Perfect. Thanks. I guess it would be the same with closing balances? That is, if one buys a building and it depreciates over 25 years, after 1 year, rather than show its closing balance, you would just show the amortization expense, right?

CaptainForest

Yes.

You would just show the amortization expense.

student007

Thanks a lot for this help. I'm really starting to understand all this a bit better. I actually have one more question. Let's say I pay employees on the 15th of every month, and month end is Dec-31. At month-end, I owe employees $500. This is what I did:

Dr. Wages Expense
Cr. Wages Payable

Is there any adjusting entry involved here, or is the above entry an adjusting entry in itself?

Thank you

CaptainForest

Your welcome.

The entry you made is correct.

student007

Final question (I hope) Let's say year-end is Dec-31. When would I show a transaction (in a journal entry) for supplies purchased throughout the year? I showed it this way:

Dec-31 Dr. Supplies
Cr. Cash

I think the entry itself is correct, but would the date be?

CaptainForest

No. You need to record the date on EACH TIME you buy supplies.

If you bought supplies on Feb 1,

then.
Feb 1
Dr. Supplies
Cr. Cash

and then on April 18 you bought more supplies, you would
April 18
Dr. Supplies
Cr. Cash

However, when you use up supplies, you do not account for them at the exact moment.

For example, the supplies you bought on Feb 1. Lets say by Feb 27 half of them have been used. You do NOT Dr. Expense, Cr. Supplies.

Instead, you just wait until year end and make one adjusting entry for the entire year of supplies (Dr. Expense, Cr Supplies)

student007

What if you're told, "you buy $700 supplies over the year" how can that be recorded?

CaptainForest

In that case, you can just do:
Dec 31
Dr. Supplies
Cr. Cash

assuming year end Dec 31.

That is just a textbook example, so it's okay to do it that way. In real life, you would never be given information like that.