Accounting, Payroll & Pension Issues/Probably a simple bookkeeping Question



income statement
income statement  

I have recently begun bookkeeping for a very small business, and it seems I have forgotten some of the steps in bookkeeping.  I'm actually a freshman in college - I took financial accounting two years ago.  

I'm confused with my Owner Equity account everything else seems to be ok. and maybe a little bit regarding COGS entry.

To briefly put it it's not entirely a business, you could say a hobby?

I may have forgotten a little more than I thought. --> Breakdown

Decided to start this bookkeeping with exact cash.
1) Invested $64.06 Cash
2) Purchased goods for $49.06
3) Cost to ship those goods $15 to me

So I managed to get my Income statement to match up correctly, but now I'm having issues getting my Owner Equity to balance a=l+o.

At the moment i'm figuring all I have are my assets, no liabilities, but my current $0 cash, and $49.06 inventory doesn't match up to my $64.06 investment.  (this is a difference of $15 - the shipping).  I'm not sure how to write this in my journal

Thanks for the help

As you said, the $49.06 of purchases is inventory. Normally, the shipping is included as inventory cost, so inventory would be $64.06 = $49.06 + $15.
Shipping can be an expense or an inventory cost; as this is to acquire inventory it should be an additional inventory cost.

To record the initial cash infusion, the offsetting credit is to an owner's equity account.

So, the end result would be:

Inventory    $64.06
Equity          $64.06

I would suggest your acquiring bookkeeping software; Quickbooks and Peachtree are well known.  

Accounting, Payroll & Pension Issues

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Arthur Naman


General accounting and bookkeeping questions. Specific questions pertaining to: monthly bookkeeping, preparing financial reports; reconciling accounts.

I cannot answer questions pertaining to pension or retirement planning.

This is not a forum to have homework answered. Please do your own homework.


30 years' experience doing tax and accounting work

MPA from Univ. of Texas at Austin, MBA Golden Gate Univ, San Francisco CA

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