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Cfcllc
January 3, 2024
Question

Recording a sale of cash asset from one company to another

  • January 3, 2024
  • 1 reply
  • 0 views

Hello,

 

a sole prop converted into an s corp, and needs to record the transfer of cash asset from one to the other

 

since the asset is Cash, i am not sure how to record.

 

Would it be Dr Cash and Cr disposal of asset for the Sole prop?

 

Then in new S Corp business, Dr. Capital and Cr Cash?

1 reply

Rainflurry
Rainflurry
January 4, 2024

@Cfcllc 

 

In the SP, debit the Owner's Draw/Owner's Capital equity account, and credit cash.  In the S-Corp, debit cash and credit Shareholder Contributions.  BTW, you don't need to use journal entries, you can write a check in the SP and create a deposit in the S-Corp.  Assign the aforementioned equity accounts to each.  

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