T-accounts: Entry for Complex Capital Investment

by Criz
(Philippines)

Q:Owner invested PHp (Philippine Pesos) 500,000 cash along with computer equipment that had a market value of php. 120,000 two years ago but was now worth php. 100,000 only...


What do I enter in the T accounts?

A:
I'm going to show this in journal entry form rather than as a T-account as it is much easier that way. It should not be hard to work out the T-account from the journal entries here:

Debit: Bank...............500,000
Credit: Capital.....................500,000

Debit: Computer equipment..................100,000
Credit: Capital.......................................100,000


Or you can do both of these 2 entries in one combined entry:

Debit: Bank.....................500,000
Debit: Computer equipment......100,000
Credit: Capital.........................................600,000


The result is the same.

By the way, I assumed above that the owner is starting his business right now, not 2 years ago. If he started the business 2 years ago the value of the computer for the journal entry would be the value at that time - i.e. 120,000.

Comments for T-accounts: Entry for Complex Capital Investment

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Accounting
by: Anonymous

I really like this course, so i have learnt a lot about the definition of financial accounts, users of accounting information, double entry.

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