I started my business with £15000 in cash, I purchased my stock, and paid my expenses, my assets show a balance of £11957 my equity is showing £6903, the difference appears to be the value of my stock. I believe my asset figure is accurate, however my equity account I'm not sure of.
my cash account shows a debit of £5054 going to debtors (purchase of stock)
my debtors account shows a credit of £5054 going to cash (paid for stock purchase)
what two accounts do I need to setup to cater for the double entry to increas my stock account, I know I need to credit the stock account by 5054, however I don't know which account to debit? is it capital? or something else entirely?
A debtor is e.g. a customer who owes your business money. When you owe money to someone they are a creditor. The entry above would make the P&L £(1000) and your balance sheet would balance as £(1000) Net liabilities and £(1000) Capital.
No offence put can you please turn your caps lock off when posting. It looks like you're SHOUTING AT PEOPLE and it makes it harder to read.
hth
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
Closing stock in your balance sheet is actually "unsold" purchases at the end of the period. To make that d/e you
dr closing stock (b/sheet) cr. purchases (p/l)
This entry is needed to allocate the amount of money spent on beer in the year, less the amount left unsold, to the p&l account. It is the amount left unsold which is closing stock and a current asset in the balance sheet.
-- Edited by ADAS on Monday 5th of September 2011 12:31:04 AM
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
