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Junior Member
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Jan 22, 2006, 08:00 AM
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Journal Entries
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?
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Ultra Member
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Jan 22, 2006, 01:01 PM
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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
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Junior Member
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Jan 22, 2006, 02:27 PM
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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?
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Ultra Member
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Jan 22, 2006, 02:28 PM
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Yes.
You would just show the amortization expense.
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Junior Member
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Jan 22, 2006, 03:52 PM
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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
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Ultra Member
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Jan 22, 2006, 09:29 PM
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Your welcome.
The entry you made is correct.
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Junior Member
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Jan 23, 2006, 07:13 PM
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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?
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Ultra Member
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Jan 24, 2006, 12:10 AM
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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)
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Junior Member
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Jan 24, 2006, 12:54 PM
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What if you're told, "you buy $700 supplies over the year" how can that be recorded?
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Ultra Member
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Jan 24, 2006, 01:02 PM
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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.
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Junior Member
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Jan 24, 2006, 03:44 PM
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Should I then state in an assumption that due to the ambiguity of the question I recorded the supplies purchased over the year as the net result of all of the purchases and thus showed it at year-end? If so, would this type of working be feesible?
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Ultra Member
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Jan 24, 2006, 08:49 PM
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Yeah, that would work.
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Junior Member
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Jan 25, 2006, 01:20 PM
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 Originally Posted by 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
Regarding this entry, what the entry on Jan 15th (assuming month-end is Dec-31) be? I put:
Dr. Wages Payable $1000
Cr. Cash $1000
I assumed that: all wages were paid in cash, and that the wages owed in one half of the year are constant throughout the pther half as well.
Is this correct, and if so, would there be any other entry that I would have to include?
Like this (occurring just prior to payment):
Dr. Wages Expense $500
Cr. Wages Payable $500
Also, in a second case, if I deposit $100 on Oct-01 into an investment account at 6% interest annually to be paid biannually (e.g. Mar.-31 and Sep-30) This is what I did:
Oct-01 Dr. Investment $100
Cr. Cash $100
Dec-31 Dr. Interest Receivable $15
Cr. Interest Revenue $15
Mar-31 Dr. Cash $100
Cr. Interest Receivable $100
Is there another entry to be made, or is it not necessary? I'm referring to the following, occurring just before the interest is paid on Mar-31:
Mar-31 Dr. Interest Receivable $85
Cr. Interest Revenue $85
*** SO that you seen more clearly what I mean, here's what my entry for the first question would appear to be like (I did use different values though)
Date Transaction Debit Credit
Dec-31 Dr. Wage Expense 4,500
Cr. Wages Payable 4,500
To record wages owed to employees on Jan-15
Jan-15 Dr. Wage Expense 4,500
Cr. Wages Payable 4,500
Dr. Wages Payable 9,000
Cr. Cash 9,000
To record the payment of owed wages to employees.
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Ultra Member
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Jan 25, 2006, 08:27 PM
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As for Case 1, you did:
Dr. Wages Payable $1000
Cr. Cash $1000
Dr. Wages Expense $500
Cr. Wages Payable $500
What I would do is just combine them. There is no need for 2 separate entries.
Jan 15
Dr. Wages Payable 500
Dr. Wages Expense 500
Cr. Cash 1,000
And as I read now, at the bottom you wrote the entries correctly. Good job.
Case 2:
Your numbers do not make sense. I am assuming you mean you invested 1,000, NOT 100?
Oct 1
Dr. Investment 1,000
Cr. Cash 1,000
Dec 31
Dr. Interest Receivable 15
Cr. Interest Revenue 15
(1,000 x 0.06 x 12 = $5/month and x3months = $15)
March 31
Dr. Cash 30
Cr. Interest Receivable 15
Cr. Interest Revenue 15
($5/month x 6 months = $30)
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