What is the journal entry for the following?
Stan opened a bank account in the name of SSRC and deposited $10,000 of his savings into the account.
To determine the journal entry for this transaction, we first need to understand the basic principles of double-entry bookkeeping.
Double-entry bookkeeping is a system in which every financial transaction affects at least two accounts. These accounts are categorized as debits and credits. Debits and credits must always balance, which means that the total amount debited must equal the total amount credited.
In this case, Stan opened a bank account in the name of SSRC and deposited $10,000 of his savings into the account. As a result, we can identify two accounts that will be affected:
1. Bank Account: This account will be debited since it is an asset account, and the cash inflow increases the balance.
2. Owner's Equity or Capital Account: This account will be credited because the deposit represents a contribution from Stan's personal savings to the business, increasing the owner's equity or capital.
Now that we have identified the accounts and which side they will be affected (debit or credit), we can construct the journal entry:
Date | Account | Debit | Credit
----------------------------------------------------------------------------------
[Date] | Bank Account | $10,000 |
[Date] | Owner's Equity | | $10,000
In the journal entry, the date of the transaction is recorded in the first column. Next, we write the account name on the second column. The debit amount is recorded in the third column for the Bank Account since it is increasing, while the credit amount is recorded in the fourth column for the Owner's Equity since it is increasing as well.
By following these guidelines and adjusting accordingly to the specific details of the transaction, you can construct the appropriate journal entry for any financial transaction.