Mitali &son’s business started with cash 200000 and machinery purchase 100000
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Cash A/c Dr 200000
To Capital A/c 200000
(Being cash introduced into business and entered as capital)
Machinery A/c Dr 100000
To Cash A/c 100000
(Being Machinery purchased, assuming it is by cash)
Explanation:
Whenever a particular firm starts a business , whatever is brought by it already is debited to capital account. Here only cash was brought already so only cash is entered into as capital. As for machinery it is clearly stated that it was purchased , thus machinery being an asset is debited and cash is given out to purchase the same thus cash is credited.
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