[Question] 2 Years Back

[Neviron]

Hi All,

So I have to take-on on opening balance for a customer. If I process a customer journal, the customer control account will automatically be affected. I don't want to affect any of my Income statement accounts, as this is a take-on opening balance. Please can someone assist by advising what the contra account for the journal entry would be?

Regards,
Nev

[Neville Bailey]

Hi Neviron,

I assume you are using Pastel?

It depends on how far back the take-on balance applies.

If it applies to the current or prior financial year, then the contra account will be one of the Sales accounts in either this year or the prior year.

If it relates to an earlier date (prior to the beginning of last year), then the contra account would be Retained Income. The problem is that, in Pastel, you can only process as far back as the beginning of the prior financial year.

[Alec Candiotes]

Hi Neviron

Take-on balances is a very technical subject, so I am glad you have brought it to this forum. I have seen many people rush it, just to sit with an eye-sore in their books forever.

I agree with Neville's feedback. I do want to strongly advise you to draw out your T-accounts on a piece of paper.

Your one leg is a customer account, but you say you do not want to affect the income statement on the other leg. What account do you want to affect on the other leg? Your T-accounts will visualise what you would like to achieve as an end result. I have started drawing out the journal you have explained below to show you how you can visualise it. Once you have populated the "Other account??", the "Date >>>" and the Values you can have a much better next step idea.


Hope this helps.

Looking forward to hearing from you.

Kindest regards,
Alec Candiotes CA(SA), MCom Taxation