In a list of economic events I was presented - one of them said\"Moved Rick\'s h

Question

In a list of economic events I was presented - one of them said"Moved Rick's home office equipment and furniture to the warehousewhere it will be now used in the business. The original cost ofthese items was $25,000 but their current value is $15,000."

Using the cost principle, we are to record $25,000. But when Ijournalize it, debit for equipment but there's no place to creditit. It was not purchased AFTER the business started. Should I omitthis just like I would omit the event that Rick paid $2,500 onproperty taxes for his home. Or am I to journalize it debit forequipment and credit for cash?

Explanation / Answer

Most likely the credit would go towards some type of Shareholders'equity account. This may be an amount for common stock or theretained earnings account. The reason I say this is would bewhere the credit should be accounted for is I am sure that Rick isan/the owner of this company.

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