Journal Entry Help

[BlancoPR]

I have a family member that bought allot of assets for a beauty salon.

Prior to opening a corporate bank account. He used a friends of ours, corporate account ( he owns a similar business) to deposit all the cash he had and pay for this assets.

The issue lies when im trying to add the assets to the new business books.

I can't affect cash, since i don't have a account to reconcile. I cant do a debit to assets and credit to A/P since he doesn't need to pay for anything (the money came from the new business owner, he just used another companies bank account)

What journal entry does our friend company and us have to make in order to add the assets to the new books and remove them from the other company books?

Thanks.

 

[bklynboy]

For the purchase of assets isn't it just debit asset credit capital paid in (equity)? I am assuming he increased his investment in the company by contributing more cash that was then used to buy assets.

 

[BlancoPR]

For the purchase of assets isn't it just debit asset credit capital paid in (equity)? I am assuming he increased his investment in the company by contributing more cash that was then used to buy assets.

Indeed he contributed cash in order to buy the assets.

But. How does the fact that he used another company bank account affect both parties?

 

[bklynboy]

Has no bearing on the accounting. What matters is that he is contributing funds to the business (capital) and uses that capital to purchase assets. The location of where funds were held is irrelevent.

 

[saad25]

Blanco.....if he had put in the money in a bank account and then used that money to buy assets the following would have happened:

Dr Bank
Cr Capital

And then to buy the F Assets...

Dr F Assets
Cr Bank

so its the same thing......... just do it like this or if you want you can show the initial funds as capital and loan to friend....

Dr Laon to Friend
Cr Capital

Dr F Assets
Cr Laon to friend

if you like!!!

Bklynboy am I right? would love to hear your thoughts!

 

[BlancoPR]

Blanco.....if he had put in the money in a bank account and then used that money to buy assets the following would have happened:

Dr Bank
Cr Capital

And then to buy the F Assets...

Dr F Assets
Cr Bank

so its the same thing......... just do it like this or if you want you can show the initial funds as capital and loan to friend....

Dr Laon to Friend
Cr Capital

Dr F Assets
Cr Laon to friend

if you like!!!

Bklynboy am I right? would love to hear your thoughts!

Cant affect a cash account on my books if it never existed.

First at the time, the new company had no bank account so the cash was deposited on another corporations bank account.

Im just going to do as replied before

DR - Asset
CR - Aditional Paid in Capital.

that way I recognize the asset on the new company books, and prepare the depreciation charts.