What will be entry for that: Busines strarted with brrowed
cash Rs. 25000 from Mr. X. if capital will be creadit.
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Answer Posted / shikha
The above question is in reference to a "Sole Proprietorship" It will have two solutions:
Case I In this treatment, we would consider that the proprietor has taken the loan from Mr. X privately seperate of the business concern. In such a situation the entry in the books of the firm would be:
Cash A/c Dr. 25,000
To Capital A/c 25,000
(Being Capital introduced in business)
Case II In this we would assume that the loan is taken by the proprietor keeping the business into consideration. The entry would be:
Cash A/c Dr. 25,000
To Capital A/c 25,000
(Being Capital introduced in business)
Capital A/c Dr. 25,000
To Mr. X's Loan A/c 25,000
(Being Mr. X's Loan recognized for
financing capital)
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