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What will be entry for that: Busines strarted with brrowed
cash Rs. 25000 from Mr. X. if capital will be creadit.
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Answer Posted / alok
the question clearly states that the business is started
with the amount taken as loan by third party. Loan and
capital both are liability of the business.
There should be considered if the proprietor wants to make
this loan as business loan or personal loan.
If the proprietor goes with business loan there should be
zero capital and business will be at full loan and without
equity(in such case the profit after exp and int. will be
the capital to the business).
Otherwise the capital will be there in business as equity
and proprietor will maintain the personal loan.
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