Capital Account Q AP2

Focus888

I had a similar question to this in my AP2 exam and i would really like to know what the correct answer would be.

Capital Account

The info they give is, introduced £20,000 from the capital account.
Owner transfers £2,000 goods to the business for resale.
Owner buys a vehicle for £5000 from the bank account.

I thought it was:
Credit side of capital
(bank) £20,000
(purchases) £2,000

Debit side
bal cd £22,000

And ignored the vehicle as it was coming out from the bank account.

Can someone let me know the correct answer to this please?

Thanks

twinks01

I had the same question, and I would agree with your answer.

Monsoon

Badly worded question. Was the vehicle for the business, or owned privately? If the latter, that's a debit to his capital account but if not, its a debit to fixed assets.