SAC TOMORROW- PLEASE HELP

[One Step at a Time]

Hi everyone 

So confused about the attached question..
I don't understand why (part c) in the file), sales and cost of sales isn't included in the general journal entry for 1/1/15, even though a sales transaction occurs during December and the fact that sales and cost of sales also have their own ledger accounts.

Is it because we start off with the balance sheet at 30/11/14? So all ledger accounts must be those that appear in the balance sheet e.g. Office assets, stock control?

[Hannibal]

The General Journal only records infrequent non-cash transactions. So those transactions there would go in the sales journal. The General Journal in this case is only used to establish the double-entry system.

[One Step at a Time]

Ah thanks Hannibal  So to establish a double-entry system, we use the same accounts e.g. bank, stock control as those in the Balance Sheet?

[Hannibal]

Ah thanks Hannibal  So to establish a double-entry system, we use the same accounts e.g. bank, stock control as those in the Balance Sheet?

Yep when converting from single-entry to double-entry you just enter all the accounts in the balance sheet into the general journal.

Only confusion you may get with this is when the owner is starting up a new business, and contributes capital. In this case that capital amount goes in the cash receipts journal and not the general journal, as it is a cash transaction. The reason it doesn't apply in this case is because the money in bank pre-exists, and you are changing system so all accounts need to be entered into the general journal.

Hope that made some sense.

[One Step at a Time]

Thank you for all your help Hannibal! Just had my first SAC and I felt so much more confident walking in having understood that concept 

I was stumped by a question that was worth 10% of the marks though  It was calculating the change in cash for the month given 2 stock cards, which had all the transactions that occurred during the month! Was completely lost