Journal entry to record the investment by owner



[Q1] Owner invested $700,000 in the business.
Prepare a journal entry to record this transaction.

[Journal Entry]

  Debit Credit
Cash 700,000  
     Owner’s Equity   700,000

[Notes]
Debit: Increase in cash
Credit: Increase in equity
This journal entry is prepared to record this transaction in the accounting records of the business.

[Q2] Owner withdrew $100,000 from the business.
Prepare a journal entry to record this transaction.

[Journal Entry]

  Debit Credit
Owner’s Equity 100,000  
     Cash   100,000

[Notes]
Debit: Decrease in equity
Credit: Decrease in cash
This journal entry is prepared to record this transaction in the accounting records of the business.

[Q3] What is the balance of owner’s equity after the withdrawal?
Owner’s equity balance = $700,000 – $100,000 = $600,000

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