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A company has formed and the company has entered into contract with a contracting company to build warehouse,office,machine foundation. the owner of the company is paying the contractor from his other companies accounts and also from his personal account as per the contracting terms1) should company creater ledger in the name of the contracting company building the warehouse or the building A/C2) what is the journal entry for the payment to the contractor to build the warehouse
1) Company should creat a Ledger in the name of Contracting Company Building A/C
2) Dr. Contracting Company(Name) Building A/C
Cr. Other Companies A/C or Personal A/C
When a small business makes a financial transaction, they make a journal entry in their accounting journal in order to record that transaction. The transaction is recorded in the general journal or one of the special journals for the most active accounts. The most common special journals are the Sales Journal, the Purchases Journal, the Cash Receipts Journal and the Cash Disbursements Journal.
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