Basic Journal Entries Question:
Capital + Fixed Asset Purchase

by Jelyn
(Philippines)

Before you begin: For purposes of exams and testing it's important to make sure you not only answer accounting questions correctly but complete them at the right speed. Be sure to time yourself for this exercise.



Difficulty Rating:
Beginner

Time limit:
5 minutes



Question:

Purchase of machinesPrepare the journal entries for the following transactions:

1. The business received 412,000 cash from Mr.Y for investment in a business.

2. The company bought machines for the business in the amount 57,000.



Solution:

The solution for this question has been provided below in the comments section as contributions from site visitors like yourself. The editor's notes in italics indicate the comments that have the correct solutions.

Note that in some of the comments below, the word "investment/s" was used to describe the first journal entry. This is incorrect. The first transaction is a capital investment, meaning an investment by the owner, and should be described as "capital."

Best,
Michael Celender
Founder of Accounting Basics for Students


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Comments for Basic Journal Entries Question:
Capital + Fixed Asset Purchase

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Journal Entries - Solutions
by: Rhenz Anthony Cabrera

Particulars. Dr. Cr

1.Cash C/A 412,000
Capital, Mr.Y 412,000
To record Mr. Y capital

2. Machinery C/A 57,000
Cash C/A 57,000
To record acquisition of Machinery


Yes! Your solutions are correct. Well done Rhenz!

Best,
Michael C.
Accounting Basics for Students


Answers
by: Hawa

Debit Credit

Cash 412000 Investment 412000

Equipment 57000 Cash 57000


Your solutions are correct but use the word "capital" instead of "investments" for the first journal entry.

Best,
Michael C.
Accounting Basics for Students

Mon
by: Anonymous

Cash 412000
Capital-Mr.Y 412000

Equipment-Machines 57000
Cash 57000


Your solutions are correct. Well done!
Best,
Michael C.
Accounting Basics for Students

Journal Entry Solutions
by: Brian Dilrac

1.cash A/c....Dr. 412000
To Mr.Y's capital A/c 412000
(Being cash recieved from
Mr.Y )
2.Machinery A/c........Dr. 57000
To cash A/c 57000
(Being machinery bought
for cash amount 57000)


Your solutions are correct Brian. Well done and well presented!
Best,
Michael C.
Accounting Basics for Students

Journal Entry
by: Aswin

Cash A/c Dr 412000
To Investment A/c 412000

Equipment A/c Dr 57000
To Cash A/c 57000


Aswin, your solutions are correct but use the word "capital" instead of "investments" for the first journal entry.

Best,
Michael C.
Accounting Basics for Students

answers
by: Anonymous

Cash (debit) 412,000
Y,Capital (credit) 412,000

Equipment (debit) 57,000
Cash (credit) 57,000


Yes, correct!
Best,
Michael C.
Accounting Basics for Students

JOURNAL
by: anthony

cash a/c dr 412000
To mr, y cr. 412000

machine a/c dr. 57000
To. Capital a/c 57000


In the 1st journal entry the word "capital" should be used for the credit entry, "Mr. Y" is not enough.

The 2nd entry here is not correct. Sorry! Please see the other comments here for the correct entry.

Best,
Michael C.
Accounting Basics for Students

Answer
by: Anonymous

1) cash 412,000
investment 412,000

2.) equipment 57,000
cash 57,000


The first entry is not correct - use the word "capital" for the credit entry, not "investment."

Best,
Michael C.
Accounting Basics for Students

journal entries
by: Anonymous

1.) cash 412,000
investment 412,000

2.) equipment 57,000
cash 57,000


The first entry is not correct - use the word "capital" for the credit entry, not "investment."

Michael C.
Accounting Basics for Students

jounal entries
by: Anonymous

1.) debit cash 412,000
credit investment 412,000
2.) debit equipment 57,000
credit cash 57,000



The first entry is not correct - the credit entry should use the word "capital," not "investment."

Best,
Michael C.
Accounting Basics for Students

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