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This is not a personal finance question, so I thought this was a better place for it than the finance forum.
Let's suppose you have a newly formed corporate entity, comprised of 10 equal partners. Each partner puts in $150,000 in starting cash, which are used by the corporation to purchase equipment, cover expenses etc. until revenues start coming in. Now, setting up the balance sheet you have $1,500,000 in cash at the starting point, but where is the balancing liability/equity entry? The $150K per partner is not a loan, so there is no debt involved. Neither is it a stock offering, so there is no stock involved. It seems the remaining option would be to put the $1,5M associated with the initial cash into retained earnings? Is this correct, or should the entry be in some other category on the liabilities & equity side of the balance sheet? Maybe I'm just being retarded and the corresponding $1.5M HAS to be represented as either either stocks or a loan-commitment? Thanks, Swede |
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