What should I credit in this journal entry: If the owner of a company puts 50,000 of his own money into the company and gets 4,000 shares of stock. I know I need to debit cash but what do i credit?
Thanks
To properly credit the journal entry, you need to credit the shareholder's equity account. Since the owner invested their own money into the company and received shares of stock, this transaction represents an increase in the owner's equity.
To credit the entry, you should credit the account called "Owner's Equity" or "Shareholder's Equity." This account represents the claims that the owner or shareholders have on the company's assets. By crediting this account, you are reflecting the increase in the owner's equity due to the investment of their own money.
Here is an example of the journal entry:
Debit: Cash (50,000)
Credit: Owner's Equity (50,000)
Please note that the specific account names may vary depending on your company's chart of accounts or accounting system. It's essential to refer to your company's specific accounting policies and guidelines when recording journal entries.