How to record capital introduced

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Before recording capital introduced

Before recording the introduction of capital ensure the appropriate nominal codes exist.

Note: If the company is a partnership, ensure that there's a Capital Introduced Account for each partner, for example, for two partners create the following codes:

To record capital introduced

The way in which capital introduced is recorded depends on what's being introduced:

• Money - Post a bank receipt.
  
  Example - £5000 cash is invested into the business
  
  1. Bank accounts > Bank receipt.
  2. Enter the following:
     
     

     Bank*	Date	N/C*	Details	Net	T/C*	Tax
     1200	Trans date	3250	Capital introduced	5000.00	T9	0.00

     
     *This information is mandatory.
     
     
  3. Save.
• Stock or assets - Post a journal entry.
  
  Example - A vehicle valued at £5000 is introduced into the business
  
  1. Nominal codes > Journal entry.
  2. Enter the following:

     N/C*	Name	Dept	Details	T/C*	Debit	Credit
     3250	Capital introduced	Department	Vehicle	T9	0.00	5000.00
     0050	Motor vehicles	Department	Vehicle	T9	5000.00	0.00

     *This information is mandatory.
     
     
  3. Save.
     
     

  TIP: If you're registered for VAT, and you paid VAT on the original purchase of the asset, contact your local tax office as you may be able to reclaim the VAT on the purchase.

• If you've checked with the local tax office and VAT can be recovered, using the given example, the following journals would apply where the net and VAT values are split between the relevant asset nominal code and purchase tax control account. They should be posted witha T1 tax code:
  
  

  N/C*	Name	Dept	Details	T/C*	Debit	Credit
  3250	Capital introduced	Department	Vehicle	T9	0.00	5000
  0050	Motor vehicles	Department	Vehicle	T1	4166.67	0.00
  2201	Purchase tax control	Department	Vehicle	T1	833.33	0.00

  *This information is mandatory.