How do I balance a general ledger that has only credit entries?
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How do I balance a general ledger that has only credit entries?
How can you have a general ledger without any debit entries? :confused:
If one makes expenditure, one have to have some money beforehand, be it from capital, from loan of through other facilities, which brings it back to creating a certain debit entry. Either that, or there is some debit balance brought from previous accounts.
You can't, as for every journal entry your debit entry amounts must equal your credit entry amounts.
For example: An owner invested cash into to business. Your journal entry will be;
Debit Cash for the amount invested
Credit the owners Capital account for the same amount.
Another example: Purchased a vehicle for $30,000 with a $5,000 deposit and the rest on a note. Your journal entry will be;
Debit Vehicle for 30,000
Credit Cash for 5,000
Credit Notes Payable for 25,000
In this example your debits and credits equal 30,000 even though you have 2 credit entries and only 1 debit entry. This is known as a compound journal entry and is correct.
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