AccountancyNEB 2076 (old course)
Following transactions are given: Chaitra 1: Cash in hand Rs.50,000, cash at Bank Rs.60,000.
Answer
Solution: Recording Opening Cash and Bank Balances
Step 1: Understanding the Transaction
The given transaction states:
- Cash in hand (physical currency): Rs. 50,000
- Cash at Bank (bank balance): Rs. 60,000
These are opening balances (initial amounts) of the business. Since no prior transactions are given, we assume these are the starting cash and bank balances for the accounting period.
Step 2: Journal Entry for Opening Cash and Bank
In accounting, cash in hand and cash at bank are assets (since they represent money owned by the business). The Journal Entry for recording these opening balances is as follows:
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
|---|---|---|---|---|
| Chaitra-1 | Cash in Hand A/c | Dr. | 50,000 | |
| Cash at Bank A/c | Dr. | 60,000 | ||
| To Capital A/c (Opening Entry) | 110,000 |
Explanation:
- Cash in Hand A/c and Cash at Bank A/c are debited (since they are assets increasing).
- Capital A/c is credited (since the business owns these assets, the capital account increases by the same amount).
Step 3: Ledger Entries
After journalizing, we post the entries to the Cash Book (a special ledger for cash transactions).
Cash Book (Opening Entry)
| Date | Particulars | L.F. | Cash in Hand (Rs.) | Cash at Bank (Rs.) |
|---|---|---|---|---|
| Chaitra-1 | Balance c/d | 50,000 | 60,000 | |
| Total | 50,000 | 60,000 |
Note:
- "Balance c/d" means "Balance carried down" (the opening balance for the next period).
- No further transactions are given, so the Cash Book remains as above.
Step 4: Trial Balance (If Required)
If a Trial Balance is prepared at this stage, it would look like this:
| Particulars | Amount (Rs.) |
|---|---|
| Cash in Hand | 50,000 |
| Cash at Bank | 60,000 |
| Capital | 110,000 |
Verification:
- Total Debit (Assets) = Rs. 110,000
- Total Credit (Capital) = Rs. 110,000
- Trial Balance is balanced.
Final Answer
The opening entry for the given cash and bank balances is recorded as follows:
- Cash in Hand A/c is debited with Rs. 50,000.
- Cash at Bank A/c is debited with Rs. 60,000.
- Capital A/c is credited with Rs. 110,000 (50,000 + 60,000).
The Cash Book reflects the opening balances as:
- Cash in Hand: Rs. 50,000
- Cash at Bank: Rs. 60,000
Total Cash and Bank Balance = Rs. 110,000 (as recorded in the Capital Account).
Discussion
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