I have to prepare a general journal entry for a company of transactions that they have done in the month of june. I have done a couple of them. But i haven't had one that says the following for the beginning:
S.Shelton, the owner, invested $105, 000 cash, office equipment with a value of $6,000, and $45,000 of drafting equipment to launch the business.
How would i set it up in the general journal entry.
this is what i think
i would first put
cash and place the 105,000 under debit
then under neath place office equipment and add the amounts 6,000+45,000 and that will give me 51,000 and i will place that under credit. Then I would have to write down the capital wouldn't i. Or should i do the capital on another line
Frontier Park was started on April 1, 2015 by C. J. Mendez. The following selected
events and transactions occurred during April 2015.
To prepare a general journal entry for the transactions described, you would follow these steps:
1. Identify the accounts involved in the transaction:
- Cash: Represents the cash invested by S.Shelton.
- Office Equipment: Represents the office equipment with a value of $6,000.
- Drafting Equipment: Represents the drafting equipment with a value of $45,000.
- Capital: Represents S.Shelton's equity in the business.
2. Determine the effects on each account:
- Cash is increasing by $105,000
- Office Equipment is increasing by $6,000
- Drafting Equipment is increasing by $45,000
- Capital is being credited with the total investment of $105,000 + $6,000 + $45,000 = $156,000.
3. Set up the general journal entry by using the debit and credit format:
Date | Account Title | Debit | Credit
----------------------------------------
| Cash | $105,000 |
| Office Equipment | | $6,000 |
| Drafting Equipment | | $45,000 |
| Capital | | $156,000 |
4. Explanation: In this entry, S.Shelton is investing in the company by contributing $105,000 in cash, $6,000 of office equipment, and $45,000 of drafting equipment. The total investment of $156,000 is credited to the Capital account to represent S.Shelton's equity in the business.
Note: The general journal entry above assumes that this is the first entry in the company's books. If there were previous transactions, you would include them before this entry.