July 1 - Started business with #10,500
July 31- Pa...
July 1 - Started business with #10,500
July 31- Paid Agromachinex #6,000 owing
them
The double entry for July 1 would be
Debit capital and credit cash
Credit cash and debit bank
Debit cash and credit capital
Debit purchases and credit cash
Correct answer is D
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) is the money used in started a business
Purchases in accounting are goods bought for resale.
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