Question

Shyam started a business with cash rs 500000 by depositing the same in bank. What will be the journal entry?

Answer 1

Answer:

Two sets of journals, the first on the Rs50,000 start up capital and the second, the payment of Rs25,000 into the bank. 1) Debit cash and credit capita accounts each with Rs50,000. Narration would be ‘Being capital introduced into the business by the owner’. 2) Debit bank and credit cash accounts each with Rs25,000. Narration: Being cash paid into the bank from initial capital. And taking it further, at the end of the two journals and ledger postings, the balances on the accounts will be Cash Rs25,000 (Dr); Bank Rs25,000 (Dr) and capital Rs50,000 (Cr) making it a total debit of Rs50,000 and a corresponding total credit of Rs50,000.

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