Question

Andrea started a taxi business by transferring her car, at a value of $5,000, into the business. What accounting entries are required to record this transaction?

Answer 1

To record Andrea transferring her car valued at $5,000 into her taxi business, you would typically make the following accounting entries:

Debit (Increase) the "Assets" account:
Debit "Taxi Car" or "Vehicle" account for $5,000.
Credit (Increase) the "Owner's Equity" or "Capital" account:
Credit "Owner's Equity" or "Capital" account for $5,000.
This entry reflects that the value of Andrea's car is now an asset of the taxi business, and her ownership stake in the business (equity or capital) has increased by the same amount. Please note that specific account names and details may vary depending on the accounting system and chart of accounts used by the business. It's advisable to consult with an accountant or use accounting software for precise record-keeping.