Owner Started a business investing $11,000 and $7,000 equipment. how do i record this
To record the owner's investment of $11,000 and the equipment worth $7,000 in the business, you need to create journal entries. Journal entries are used to record the initial transactions of a business. Here's how you can record this:
1. Create an entry for the owner's investment:
- Debit (Dr.) the "Cash" account with $11,000
- Credit (Cr.) the "Owner's Equity" account with $11,000
This entry reflects the owner investing $11,000 of their personal funds into the business.
2. Create an entry for the purchase of equipment:
- Debit (Dr.) the "Equipment" account with $7,000
- Credit (Cr.) the "Cash" account with $7,000
This entry acknowledges that the business purchased equipment worth $7,000 using its available cash.
Please note that this explanation assumes your business uses a single "Cash" account to record all cash transactions. Additionally, for the purpose of this explanation, it is assumed that the owner's capital account is grouped under "Owner's Equity."
It's important to consult with a professional accountant or bookkeeper to ensure you record these transactions correctly in accordance with your specific accounting system and regulations.