Double entry question, anyone know???

Kieron Registered Posts: 24 Dedicated contributor 🌟 🐵 🌟
I have recently been invited for a job interview but beforehand was asked some double entry questions in a telephone interview. I think I answered them fairly well but the final question was this and I wasn't sure of the answer....

Company A buys company B for $100,000 - what is the double entry to the accounts for both company A and company B?

I said for Company A that the entry would be CR Bank and DR Captial - would it be shares capital??? If anyone could clarify just so that I know for sure I would appreciate it....

Many thanks


  • Jellinator
    Jellinator Registered Posts: 2 New contributor 🐸
    Company A buys company B for $100,000

    I'd be asking does Company B have a quoted share price

    (Company A) DR Investments (B/Sheet) $100,000 + CR Bank $100,000
    (Company B) DR Bank $100,000 + CR *Source $100,000

    *Source can be share capital, share premium or loan accounts depending on ownership
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