2. When recording the opening balance of John Jones's account on the first day of the statement period, which journal entry is correct if his account had a balance of \$5,000?

• A. Debit Owner's Capital \$5,000; Credit Cash \$5,000
• B. Debit Cash \$2,500; Credit Owner's Capital \$2,500
• C. Debit Cash \$5,000; Credit Owner's Capital \$5,000
• D. Debit Revenue \$5,000; Credit Cash \$5,000

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the context of the problem. The opening balance refers to the amount of money in John Jones's account at the beginning of the statement period. This balance needs to be recorded in the accounting system using a journal entry.
2. Step 2: Recall the basic accounting principle of double-entry bookkeeping. Every transaction must have a debit and a credit entry, and the total debits must equal the total credits.
3. Step 3: Analyze the account types involved. 'Cash' is an asset account, and 'Owner's Capital' is an equity account. An increase in assets is recorded as a debit, while an increase in equity is recorded as a credit.
4. Step 4: Determine the correct journal entry based on the given balance of \$5,000. Since the account had a balance of \$5,000, the journal entry should reflect an increase in the Cash account (debit) and an increase in the Owner's Capital account (credit).
5. Step 5: Write the journal entry: Debit Cash \$5,000; Credit Owner's Capital \$5,000. This entry correctly reflects the increase in assets and equity due to the opening balance.