To record the commencement of business, we need to identify the assets brought into the business and the…

Question

To record the commencement of business, we need to identify the assets brought into the business and the corresponding capital introduced by the owner.

ScanSolve AI Tutor · Accepted Answer

To record the commencement of business, we need to identify the assets brought into the business and the corresponding capital introduced by the owner. Cash is an asset, and it is increasing, so it will be debited. Goods (Inventory) is an asset, and it is increasing, so it will be debited. Capital represents the owner's investment, and it is increasing, so it will be credited. Step 1: Identify the accounts and amounts. Cash: ₹ 15,000 Goods: ₹ 500 Capital: ₹ 15,000 + ₹ 500 = ₹ 15,500 Step 2: Prepare the journal entry. Date — Particulars — L.F. — Debit (₹) — Credit (₹)January 1 — Cash A/c Dr. — 15,000 Goods A/c Dr. — 500 To Capital A/c — 15,500 (Being business commenced with cash and goods)
The journal entry is: |l|l|r|r| Date & Particulars & Debit (₹) & Credit (₹) January 1 & Cash A/c Dr. & 15,000 & & Goods A/c Dr. & 500 & & To Capital A/c & & 15,500 & (Being business commenced with cash and goods) & &

To record the commencement of business, we need to identify the assets brought into the business and the corresponding capital introduced by the owner.

Step-by-step solution

Identify the accounts and amounts.

Prepare the journal entry.

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