July 1 - Started business with #10,500 July 31- Paid Agromachinex #6,000 owing them The double entry for July 1 would be
A. debit capital and credit cash B. credit cash and debit bank C. debit cash and credit capital D. debit purchases and credit cash
Correct Answer: D
Explanation
Starting a business with 10500 means the business owner must have bought good for resale with that amount of money. Therefore we will debit purchase/stock account and credit cash account Note; capital (cash in this case)Â is the money used in started a business Purchases in accounting are goods bought for resale.
