Is the below correct?
Question: I open a hot dog stand and contribute a hot dog. What happens to the financial statements? Ignore taxes.
is the journal entry the following
Dr. Inventory = Cost of hotdog
Cr. Equity = Cost of hotdog
There is no impact yet on the Income statement as no sale happened
Thank you
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debit assets credit liabilities. D- Hot dog C-hot dogs payable?
I am not sure Why do we credit hot dogs payable? the business did not buy hot dogs on account from a supplier. The owner "contributed" a hot dog , so its from their own account, I think it should go under equity.
Assets: most have a normal debit balance. Hot dogs would be a asset since you intend on turning it into cash. Liabilities have a normal credit balance. Stockholders equity refers to common stock, preferred stock, etc. As you probably already know you have to do the "matching principle" due to GAAP.
You are right. The payable would be if the business bought a hot dog to sell and didnt pay for it. Since something outside the company is contributing something, it is equity.
Thank you.
If you contribute a hot dog, you should at least be able to slide it in the bun.
Depending on the situation, you may have to make a capital contribution, but don't expect any equity. Consider it a royalty payment. Or a short-term lease.
What happens to your financial statements? You get mustard on them.
If this is an intro bookkeeping class your answer doesn't look unreasonable.
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