Journalizing a Business Transaction – Example 10
On Jan 31st, Mr. John brought his own computer, worth $500, to the business.
Step 1: Analysis:
The accounts affected in the transaction are:
- Office Equipment Account
- Mr. John’s Capital Account
- Office Equipment is an Asset account
- Mr. John’s Capital account is the Owner’s Equity account
- Office Equipment account increases by $500
- Mr. John’s Capital account increases by $500
Step 2: Debit – Credit Rule:
- Increase in the Asset account is recorded as debit. Debit the Office Equipment account for $500.
- Increase in the Owner’s Equity Account is recorded as credit. Credit Mr. John’s Capital account for $500.
Step 3: Prepare a T Account:
Step 4: Pass a Journal Entry:
Date |
Account Title |
Debit |
Credit |
Jan 31 |
Office Equipment Account |
$500 |
|
|
Mr. John’s Capital Account |
|
$500 |
|
Check No. 505 |
|
|