Before I ask my question I'd just like to say how helpful I have found your forum in the past and thanks in advance for any help offered regarding my current dilemma.
I have just completed a Level 2 computerised exam on Sage. Opening balances of £3000 Accruals needed reversing to Accountancy - I'd not covered this in the course so after extensive research online and off I decided that I would post the journal Dr £3000 Accruals and Cr £3000 Accountancy. I was confident about this and continued to work my way through the rest of the paper until I finally had to print off P&L and B/Sheet reports - thats where the confusion has started.
In my list of overheads the reversal has shown up as a bracketed figure and is also bracketed on the balance sheet under short term creditors. I cant make sense of this in my head at all and now I'm not sure if my original transaction was correct. Would somebody explain to me in simple terms what the software has done - the trial balance now shows Cr Accountancy £3000 which is I think is correct.
Your original journal was correct. To reverse accrual journals you DR Accruals and CR whatever expense account was originally debited (in your case Accountancy). If you ran the P&L for just the month that you did the reversal then Sage shows the movement on the Accountancy account for that month, which in this case was CR 3000, hence the figure is in brackets. And when you run the BS for just the one month then the movement on the Accruals account is showing, in this case DR 3000 (and because this is a debit entry in a liability account which is usually in credit, again the figure will be in brackets). If you run the reports over the two months then these figures will cancel each other out and neither will appear.
It's much clearer in my head this evening - the difficulty I seem to be having is translating what I know about manual bookkeeping in to what the software is doing - honestly, my head has been ready to explode.
I'm still a bit confused about something though. The original Trial Balance I was given showed Dr Accruals £3000 - but there was not a O/Bal for Accountancy. On entering the reversal - The T/B now shows a credit balance in Accountancy for £3000, and thinking through it manually doesn't that mean that when the invoice for £3000 finally arrives I'll end up with a cr Accountancy balance of £6000?
As I've explained, my head has been so full of debits and credits that I'm probably missing something very simple - but any light you can throw on this would be great.
For the record - I posted my exam off this morning - so fingers crossed!
Of course you are correct - the opening Accruals balance was Cr and not Dr - frazzled brain!
I did wonder about retained earnings what about the TB cr balance now in Accountancy
On another note - does anybody have any good ideas on how to switch your brain off when it just won't stop! I've had this problem before when I physically know thinking about a problem cant do any more good but I keep going over and over it.
Glad you are sorted now though!
