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Thread: Opening balances

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    Question Opening balances

    Hi, I am working on Pastel Express and need to load opening balances (Debtors & Creditors) as well as all my General ledger accounts. It is a new set of books that I have just created and I just need some advice. Thanks

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    Platinum Member Neville Bailey's Avatar
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    If you need to take on the opening balances of an existing business, you will need to have the following minimum information on hand - a trial balance (from your previous accounting system), a list of debtors and a list of creditors.

    Here is an example of how to take on opening balances.

    Let's assume that the trial balance is as follows:

    Debit
    Credit
    Sales
    100,000.00
    Expenses
    75,000.00
    Retained Income
    50,000.00
    Capital
    50,000.00
    Long Term Liabilities
    200,000.00
    Fixed Assets
    300,000.00
    Bank
    20,000.00
    Trade Debtors
    20,000.00
    Trade Creditors
    15,000.00
    TOTAL
    415,000.00
    415,000.00


    You will notice that the total of the Debits is equal to the total of the Credits - that is important!

    Now, assume that the breakdown of your Trade debtors is as follows:

    Customer A - R15,000 Dr
    Customer B - R5,000 Dr

    And your Trade creditors is made up of:

    Supplier A - R7,000 Cr
    Supplier B - R8,000 Cr

    You would create the following Opening Balance accounts in your new system:

    - 9990/000 Opening balance account - Main account
    - 9990/001 Opening balance account - General Ledger
    - 9990/002 Opening balance account - Customers
    - 9990/003 Opening balance account - Suppliers
    - 9990/004 Opening balance account - Bank

    Your journals would be as follows:

    General journal:

    Debit
    Credit
    9990/001
    100,000.00
    Sales
    100,000.00
    Expenses
    75,000.00
    9990/001
    75,000.00
    9990/001
    50,000.00
    Retained Income
    50,000.00
    9990/001
    50,000.00
    Capital
    50,000.00
    9990/001
    200,000.00
    Long Term Liabilities
    200,000.00
    Fixed Assets
    300,000.00
    9990/001
    300,000.00


    Customer journal:

    Debit
    Credit
    Customer A
    15,000.00
    9990/002
    15,000.00
    Customer B
    5,000.00
    9990/002
    5,000.00


    Supplier journal:

    Debit
    Credit
    9990/003
    7,000.00
    Supplier A
    7,000.00
    9990/003
    8,000.00
    Supplier B
    8,000.00


    Cashbook Receipts journal:

    Allocate R20,000 to 9990/004

    If you look at the resulting balances for each of the 9990 sub-accounts, they will be as follows:

    9990/001 - R25,000 Dr
    9990/002 - R20,000 Cr
    9990/003 - R15,000 Dr
    9990/004 - R20,000 Cr

    However, the net balance on the main account 9990/000 is zero - this will confirm that you have captured the opening balances correctly.
    Neville Bailey - Pastel Accounting Consultant and Photographer
    neville@accountingsoftwaresupport.co.za
    www.accountingsoftwaresupport.co.za
    View Neville Bailey Photography

    "Give every person more in use value than you take from them in cash value."
    WALLACE WATTLES (1860-1911)

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    Platinum Member Neville Bailey's Avatar
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    I forgot to mention that, if your opening balances are the closing balances for the previous financial year, then you need to process each of the above journals as Last Year journals, so that they reflect as opening balances for the current financial year.

    For example, if the new financial year starts on 1 March 2011, and you have closing balances as at 28 February 2011 that you want to take on, then open each journal, go to the Settings button at the bottom, and untick the box named "This Year Transactions", then click on Close. You will then see the words "Last Year" in red at the bottom of the journal. Now, select period 12 of last year, and capture the entries there.
    Neville Bailey - Pastel Accounting Consultant and Photographer
    neville@accountingsoftwaresupport.co.za
    www.accountingsoftwaresupport.co.za
    View Neville Bailey Photography

    "Give every person more in use value than you take from them in cash value."
    WALLACE WATTLES (1860-1911)

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    Thumbs up Thank you

    I cannot thank you enough for the prompt and clear advise, it is exactly what I was looking for.

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    Thank you Thank you................... THANK YOU THANK YOU THANK YOU WOW!!!!!!!!!!!!!!!!!!!! that really got me out of a messy situation. Thanks Mr Bailey

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    i have suspense in my trial balance

    My name is Thato I work as finance and admin assistant. I have just captured the opening balances for a new company so i have suspense, please help,

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    Platinum Member Neville Bailey's Avatar
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    Quote Originally Posted by Thato View Post
    My name is Thato I work as finance and admin assistant. I have just captured the opening balances for a new company so i have suspense, please help,
    Either you have captured opening balances from a trial balance that does not balance, or you have made a data capturing error, or you have missed/duplicated certain opening balances.
    Neville Bailey - Pastel Accounting Consultant and Photographer
    neville@accountingsoftwaresupport.co.za
    www.accountingsoftwaresupport.co.za
    View Neville Bailey Photography

    "Give every person more in use value than you take from them in cash value."
    WALLACE WATTLES (1860-1911)

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    Thank you Neville, i have been struggling to adjust last year number so they appear as opening balance. You have sorted me. Thank you

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    New Member Holger's Avatar
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    Take On balances - Bank

    Quote Originally Posted by Neville Bailey View Post
    I forgot to mention that, if your opening balances are the closing balances for the previous financial year, then you need to process each of the above journals as Last Year journals, so that they reflect as opening balances for the current financial year.

    For example, if the new financial year starts on 1 March 2011, and you have closing balances as at 28 February 2011 that you want to take on, then open each journal, go to the Settings button at the bottom, and untick the box named "This Year Transactions", then click on Close. You will then see the words "Last Year" in red at the bottom of the journal. Now, select period 12 of last year, and capture the entries there.
    Hi Neville
    where do you process "Take On" balances for Bank? My understanding is that posting a opening balance into bank via a journal will not refelect in the bank recon?

  11. #10
    Platinum Member Neville Bailey's Avatar
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    Quote Originally Posted by Holger View Post
    Hi Neville
    where do you process "Take On" balances for Bank? My understanding is that posting a opening balance into bank via a journal will not refelect in the bank recon?
    Hi Holger,

    You need to process either a cashbook payments journal (for an unfavourable opening balance) or a cashbook receipts journal (for a favourable opening balance) and allocate the transaction to the Suspense account.
    Neville Bailey - Pastel Accounting Consultant and Photographer
    neville@accountingsoftwaresupport.co.za
    www.accountingsoftwaresupport.co.za
    View Neville Bailey Photography

    "Give every person more in use value than you take from them in cash value."
    WALLACE WATTLES (1860-1911)

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