How do I enter last financial year's comparative balances?
And if I start to use Free Accounting Software in Oct, how do I enter the Balances from the Trial Balance from the Sept Qtr?

Opening balances should be entered as a journal with the date of the last day of the prior period. If you are going to enter the comparative balances (prior financial year balances) then it should be dated prior to the comparative year.

Note there is no "Retained Earnings" account. Do not create one! The reports automatically calculate retained earnings. Post the opening retained earnings figure to "Other Revenue" or "Other Expense".

Also note you cannot post a journal to Cash at Bank. You have to process a receipt or payment for the opening cash balance. e.g. when entering the above journal post the "Cash at Bank" to the account "Cash on Hand". Then process a receipt and post the receipt to the account "Cash on Hand", so that they offset each other.

If you are entering comparative balances you can follow the same process as the opening balances. i.e. a journal for most of the balances and a receipt or payment for the "Cash at Bank" movement. Any date in the financial year will work but I suggest the last day of the financial year.

For the part of the current financial year that you are not using Free Accounting Software you can use the same method again. Keep in mind that when your accountant prepares your tax return they may want to see reports from the previous accounting software to substantiate the amount. If there are not many transactions I suggest just re-enter them.

Also note for accounts receivable and accounts payable you cannot journal to these accounts. You need to process a "Credit Sale" or "Credit Purchase", similar to the way the opening "Cash at Bank" balance is set up.

Hi Glen
I was hoping you could give me a little guidance please as I have been using an excel spreadsheet to record all my income and expense so still learning the “debit, credit” double entry system.

Before I go posting journal entries for the 2011 financial year can I please confirm I have it correct as I am a little confused where to post the negative $ amounts. I presume they will all go to “cash on Hand”

Also what identifier do I put in as these are for the whole financial year not an individual customer or supplier. (the journal screen won’t let me save without an identifier)
Examples - All will be dated for 30/06/2011

Journal entry 1 - Income
$??.00 Post to “other revenue”
-$??.00 Post to “Cash on hand”

Journal Entry 2 – Bank Interest
$??.00 Post to “Interest earned”
-$??.00.00 Post to “Cash on hand”

Journal Entry 3 - Sales
$??.00 Post to “other expenses”
-$??.00 Post to “Cash on hand”

Journal entry 4 – Motor vehicle (cents per Km mileage)
$??.00 Post to “other motor vehicle expenses”
-$??.00 Post to “Cash on hand”

Journal entry – 5 printing and stationary (I will create a new expense account)
$??.00 Post to “printing and stationery”
-$??.00 Post to “Cash on hand”

Journal entry – 6 advertising and promotion (I will create a new expense account)
$??.00 Post to “advertising and promotion”
-$??.00 Post to “Cash on hand”

Is there anything else I need to do once I have entered these journals?

Thankyou

Hi Stacey,

In terms of the double entry, it's mostly hidden from the user as most of the users are not accountants. However, as you have found out once you start entering journals, as opposed to sales, receipts, purchases and payments, it best to know something about this.

In Free Accounting Software Journals debits are entered as positive figures and credits are entered as negative figures. The normal sign for revenue (and liabilities and equity) is a credit so you should enter it as a negative figure. In your example this would apply to "other revenue" and "interest earned".

Also the journals you have outlined can all be done as one journal. So the journal is:
-$??.00 Post to “other revenue”
-$??.00 Post to “Interest earned”
+$??.00 Post to “other expenses”
+$??.00 Post to “other motor vehicle expenses”
+$??.00 Post to “printing and stationery”
+$??.00 Post to “advertising and promotion”
+$??.00 Post to “Cash on hand”

You may also need other accounts such as:
-$??.00 "Loan from owner"
-$??.00 "Sole trader equity"

The balance of "Cash on hand" would then be equal to the business's cash at bank balance on 30/06/2011. You then process a receipt and use account "Cash on hand" and then the balance of cash on hand will be zero.

After you enter the journal you can view it in the balance sheet and profit and loss. If it is not correct you can just click "edit" and change it.