Hi, I'm hoping someone can help. I have a new client who has been "loosely" running an ebay business for some months, but has never done the accounts til now. She is making a loss rather than a profit & wanted to find out where she was at. I have entered her bank account opening balance through the O/B button, which was overdrawn, and carried on inputting her last 6 month's transactions. When I ran the TB to check the figures at the end, there was a debit of £500-odd in the suspense account, which is the opening balance of her bank account, which I now understand I should have reversed at the start. The problem is, I can't work out how to remove this suspense account figure. She had no other opening balances as we started from scratch in April, apart from her bank account figure which was negative. There were no unreconciled transactions as such on her bank account, just a severe lack of funds!
If you had no opening balances then how can you start with a negative bank balance? You can either start with £nil or the owner can put money in so their would be money in the bank account and the other side would either be capital introduced or directors loan.
Will leave you to work out how you could start with a negative bank balance. From an accounting viewpoint the journal to recognise the bank opening balance would be
That makes sense - the penny has now dropped! Many thanks for that! She had a negative opening balance on her bank account because she has been using the bank account for her Ebay transactions up until April of this year - she asked me to start from April as she hadn't done much up until then, and hadn't registered as a sole trader or business at that point. I think I might put the figure against stock, rather than DLA or drawings as she has bought in a lot of stock to sell, hence why the balance is overdrawn. I should have thought of that in the first place!
