7.6 Situation 3 - Non-cash contributions and drawings

VCE Accounting Unit 3. Video of this presentation can be found on my YouTube channel here https://www.youtube.com/channel/UCf5jyuJoYwie8tWfvjEc0zg.

1. 7.6 Situation #3: non-cash contributions and drawings

2. 7.6 SITUATION #3 non-cash contributions and drawings Business Owner Owner contributes cash to the business… Cash Receipts Journal Cash Payments Journal Owner withdraws cash from the business… Capital contribution Drawings

3. But capital contributions and drawings can be non-cash items … 7.6 SITUATION #3 non-cash contributions and drawings Business Owner

4. July 1 – the owner contributed an office desk to the business with an agreed value of $200 . Business Owner General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 1 Office furniture [A] 200 Capital [OE] 200 Owner contributed office desk to business (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 1 Office furniture [A] 200 Capital [OE] 200 Owner contributed office desk to business (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 1 Office furniture [A] 200 Capital [OE] 200 Owner contributed office desk to business (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 1 Office furniture [A] 200 Capital [OE] 200 Owner contributed office desk to business (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 1 Office furniture [A] 200 Capital [OE] 200 Owner contributed office desk to business (Memo 1) 7.6 SITUATION #3 non-cash contributions and drawings

5. The entry in the General Journal is then posted directly to the General Ledger General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 1 Office furniture [A] 200 Capital [OE] 200 Owner contributed office desk to business (Memo 1) Office Furniture [A] 31/7 Capital 200 Entered on actual day of transaction Posted on last day of period Capital [OE] 30/6 Capital 200 31/7 Office furniture 200 Posted on last day of period 7.6 SITUATION #3 non-cash contributions and drawings Debit Credit Assets   Debit Credit Owner’s Equity   General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 1 Office furniture [A] 200 Capital [OE] 200 Owner contributed office desk to business (Memo 1) Office Furniture [A] 31/7 Capital 200 Debit Credit Assets   General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 1 Office furniture [A] 200 Capital [OE] 200 Owner contributed office desk to business (Memo 1) Capital [OE] 30/6 Capital 200 31/7 Office furniture 200 Debit Credit Owner’s Equity  

6. July 2 – the owner withdrew stock with a value of $100 (plus $10 GST) for personal use Business Owner The cost price of $100 ? The GST inclusive amount of $110 ? or Should the stock be recorded at… Withdrawals of assets by the owner do NOT include GST 7.6 SITUATION #3 non-cash contributions and drawings

7. But there will be times when the owner contributes or withdraws non-cash items , e.g. July 2 – the owner withdrew stock with a value of $100 (plus $10 GST) for personal use General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 2 Drawings [-OE] 100 Stock [A] 100 Owner withdrew stock for personal use (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 2 Drawings [-OE] 100 Stock [A] 100 Owner withdrew stock for personal use (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 2 Drawings [-OE] 100 Stock [A] 100 Owner withdrew stock for personal use (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 2 Drawings [-OE] 100 Stock [A] 100 Owner withdrew stock for personal use (Memo 1) General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 2 Drawings [-OE] 100 Stock [A] 100 Owner withdrew stock for personal use (Memo 1) 7.6 SITUATION #3 non-cash contributions and drawings

8. The entry in the General Journal is then posted directly to the General Ledger General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 2 Drawings [-OE] 100 Stock [A] 100 Owner withdrew stock for personal use (Memo 1) Drawings [-OE] 31/7 Stock 100 Entered on actual day of transaction Posted on last day of period Stock [A] 30/6 Capital 200 31/7 Drawings 100 Posted on last day of period 7.6 SITUATION #3 non-cash contributions and drawings Debit Credit Negative OE   Debit Credit Assets   General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 2 Drawings [-OE] 100 Stock [A] 100 Owner withdrew stock for personal use (Memo 1) Drawings [-OE] 31/7 Stock 100 Debit Credit Negative OE   General Journal Date Details General Ledger Subsidiary Ledger Debit Credit Debit Credit Jul 2 Drawings [-OE] 100 Stock [A] 100 Owner withdrew stock for personal use (Memo 1) Stock [A] 30/6 Capital 200 31/7 Drawings 100 Debit Credit Assets  

9. Task In-class Homework Ex7.6 X