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Aug 1, 2024 3:21 PM UTC
Question

J/E For Owner Contributions For New Property Purchase

I'm stumped, any help is appreciated.  Shareholders contribute $2,700,00 to the purchase of a property. The actual property purchase price is $2,500,000, leaving excess contributions which should be moved to equity account. What am I doing wrong?

 

J/E #1

Dr Opening Balance $2,700,000

Cr Shareholder Accounts $2,700,000

 

J/E #2:

The purchase price is $2,500,000:

Dr Opening Balance $2,500,000

Cr Buildings & Other Depreciable Assets $2,000,000

CR Closing Costs $500,000

 

How do I reallocate the remaining $200,000 out of the opening balance to reach a 0 balance? If I Cr the opening balance, that results in a Dr to shareholder equity account. Thank you. 

 

 

1 reply

Rainflurry
Aug 2, 2024 12:32 PM UTC

@LifeOfRiley 


What’s “Opening Balance” in your entries?  A bank account or an equity account?  If they contributed cash, the entry is a debit to cash, credit to shareholder contributions.  Then purchase the property with cash.