Let's say that this business is made up for 3 different owners - A, B and C. C has left the business and has sold $10000 worth of his shares evenly to A; B so each of them gets $5000.
Assuming that each business owner already has their own respective equity accounts, we'll have to pass a journal entry to make the required adjustments. To do this:
- Select + New.
- Select Journal Entry.
We have to debit C's equity account to reduce it and at the same time, credit the equity accounts of A and B to raise it.
The transacting of cash is among the owners and does not involve the business's bank account. As such, all that is required is to record the transfer of shares.