380 Investments
Owner’s Equity
Net Worth
Synopsis
Account 380 is established for partnerships and proprietorships to record the Investments of owners. Corporations may not use this account.
Debits |
Credits |
|
|
Example 1
Record the additional investment of $50,000 made by one of the partners.
Journal: Cash Receipts
Entry: |
|
Debit |
Credit |
Account 201 |
Cash on Hand |
$50,000 |
|
Account 380 |
Investments |
|
$50,000 |
Example 2
Record the transfer of the balance of $10,000 in the drawings account at the end of the accounting year.
Journal: General Journal
Entry: |
|
Debit |
Credit |
Account 380 |
Investments |
$10,000 |
|
Account 390 |
Drawings |
|
$10,000 |
Example 3
Record the transfer of the net profit of $1,365,137 at the end of the accounting year.
Journal: General Journal
Entry: |
|
Debit |
Credit |
Account 399 |
Profit or Loss |
$1,365,137 |
|
Account 380 |
Investments |
|
$1,365,137 |
Comments
A credit balance represents the investment and retained profits accumulated in prior years in an unincorporated business.
Note:
Separate general ledger accounts should be provided for each partner. The balances in these accounts should be combined in Account 380, Investments on the operating report.