Cash a/c. Dr. 100000 To cash. 80000 To Mr.Ratan. 20000

Journal Entry for Starting Business with Cash and Borrowing from Mr. Ratan

When starting a business, the owner typically invests a certain amount of cash to get the business up and running. In some cases, the owner may also borrow money from an individual or a financial institution to supplement their initial investment. Here is an example of a journal entry for starting a business with cash and borrowing from Mr. Ratan.

Cash and Borrowing Journal Entry:

Date: [Date of Transaction]

Account Title | Debit | Credit
--- | --- | ---
Cash | 100,000 |
Notes Payable - Mr. Ratan | 20,000 |

Explanation:

The journal entry above shows the transaction for starting a business with cash and borrowing from Mr. Ratan. The details of the transaction are explained below:

Debit: The debit side of the journal entry shows the cash invested in the business. In this case, the owner invested 100,000 in the business.

Credit: The credit side of the journal entry shows the notes payable, which represents the amount borrowed from Mr. Ratan. In this case, the owner borrowed 20,000 from Mr. Ratan.

Conclusion:

Starting a business with cash and borrowing from an individual is a common practice. Keeping accurate records of the transaction is important for financial reporting purposes. The journal entry above shows the proper way to record this type of transaction.