If the owner of a company invests personal funds into his company, where does that fit into the balance sheet.
I know the cash will increase, but I don't know how it put it in the equity section. For example, If Greg Jones invests $2000 into his company, would to equity section of Balance Sheet, in report form for the month of April, look like this?
EQUITY
G. Jones, Capital at March 31 = $70000
Net Income (loss)= $60000
G. Jones Drawings= -$5000
G. Jones Investment= $2000
G. Jones Equity at April 31= $127000
Thanks.
To understand where the owner's personal funds fit into the balance sheet, let's break it down step by step.
1. The owner's personal investment in the company will increase the company's cash account. So, in the asset section of the balance sheet, the cash balance will increase by $2,000.
2. In the equity section of the balance sheet, the owner's personal investment will be recorded under the owner's capital account. In this case, as Greg Jones is the owner, the investment will be recorded as "G. Jones Investment" or "Greg Jones, Capital." This account will increase by $2,000.
Therefore, the correct representation of the equity section on the balance sheet for the month of April would be as follows:
EQUITY:
G. Jones, Capital at March 31 = $70,000
Net Income (loss) = $60,000
G. Jones Drawings = -$5,000
G. Jones Investment = $2,000
G. Jones Equity at April 30 = $127,000
Note: The date mentioned in your example is April 31, which is not a valid date as April only has 30 days. I assume it was a typo, and I adjusted it to April 30.