Betty’s Bakery

Small Business Manual Accounting & Bookkeeping Practice Set

Prior Year Account Balances

The chart on the right shows the ending account balances as a result of operations for the previous twelve months These account balances must be carried forward as new account balances for the new year.

Note that credit account balances are shown in parentheses and should be entered in that format.

To enter the prior year’s ending account balances to the General Ledger:

1. Locate the General Ledger at Pages 4.1 to 4.27. The pages may remain in the manual or may be removed at your option.

2. Enter each account balance shown on the right, one at a time, on the FIRST LINE of the correct General Ledger account page.

3. For example, Cash in Bank Account 100: Enter 01/01/20XX for the date, Prior Year Balance for the description, and $6,000 in the balance column.

4. Enter all remaining asset, liability, equity, income, and expense account balances with the same date and description, and appropriate debit or credit amount

The income and expense account balances applicable to the prior year must next be closed with the net difference recorded to the owner equity Retained Earnings account (see next section below).