Incorporation costs: Financial events series, part 2 of 29
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TechnolOntario incorporates on January 1, 2007. Jean pays $1,000 of his own money to pay the costs involved. We can assume that Jean will want eventual reimbursement from the company.
The journal entry would record this event as a $1,000 debit for an incorporation expense and a $1,000 credit for a liability due to shareholder/owner.
The financial statements would read:
Information on this series
To demonstrate how various business transactions and other economic events impact the financial statements, this series tracks the accounts of the first fiscal year of a fictional start-up company called TechnolOntario, Inc. Common financial events are introduced and recorded one by one, and they accumulate on the financial statements as TechnolOntario’s fiscal year progresses.
Note that together these examples form a series of 29 articles. Check our complete list of accounting examples to specifically select which ones you’d like to see. Or you can follow the series from start to finish. This article is part 2 of 29.
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References
Markle, K. (2004, August). Introduction to Accounting. Presentation delivered at Schulich School of Business, York University, Toronto, Canada.
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