If A Check Received From Debtors Is Given To A Company, Does It Also Go Into The Share Capital With Example
If a check / cheque received from Debtors / Accounts Receivable , then it is debited in the cash account. The other account “Accounts Receivable Account” is credited but it is not recorded under share capital account. The reason behind is that the cash received from debtors belongs to company’s checking account and not with the owners or shareholders’ account. The company or corporation is a separate legal entity having its own seal and enter into the contract. So, this transaction related to receiving cheque from debtors (customers) on the behalf of the company should be recorded in the company’s checking account and accounts receivable account. Customers purchased goods on credit from the company and not from shareholders and then make payments to company through check is also concerned with the business matters of company. If the owners invested their own cash into the business i.e., purchased shares then it will be added to the share capital account which ultimately will inc...