diff --git a/src/executive.rs b/src/executive.rs
index b113363fd..039a6007e 100644
--- a/src/executive.rs
+++ b/src/executive.rs
@@ -251,12 +251,13 @@ impl<'a> Executive<'a> {
 		// part of substate that may be reverted
 		let mut unconfirmed_substate = Substate::new();
 
-		// at first create new contract
-		self.state.new_contract(&params.address);
-
-		// then transfer value to it
+		// create contract and transfer value to it if necessary
+		let prev_bal = self.state.balance(&params.address);
 		if let ActionValue::Transfer(val) = params.value {
-			self.state.transfer_balance(&params.sender, &params.address, &val);
+			self.state.sub_balance(&params.sender, &val);
+			self.state.new_contract(&params.address, val + prev_bal);
+		} else {
+			self.state.new_contract(&params.address, prev_bal);
 		}
 
 		let res = {
diff --git a/src/state.rs b/src/state.rs
index 7310f63a7..9b44d7194 100644
--- a/src/state.rs
+++ b/src/state.rs
@@ -72,8 +72,8 @@ impl State {
 
 	/// Create a new contract at address `contract`. If there is already an account at the address
 	/// it will have its code reset, ready for `init_code()`.
-	pub fn new_contract(&mut self, contract: &Address) {
-		self.require_or_from(contract, false, || Account::new_contract(U256::from(0u8)), |r| r.reset_code());
+	pub fn new_contract(&mut self, contract: &Address, balance: U256) {
+		self.cache.borrow_mut().insert(contract.clone(), Some(Account::new_contract(balance)));
 	}
 
 	/// Remove an existing account.
diff --git a/src/tests/executive.rs b/src/tests/executive.rs
index 1df1b7eec..ab5cdaf98 100644
--- a/src/tests/executive.rs
+++ b/src/tests/executive.rs
@@ -182,8 +182,7 @@ fn do_json_test_for(vm: &VMType, json_data: &[u8]) -> Vec<String> {
 			let code = xjson!(&s["code"]);
 			let _nonce: U256 = xjson!(&s["nonce"]);
 
-			state.new_contract(&address);
-			state.add_balance(&address, &balance);
+			state.new_contract(&address, balance);
 			state.init_code(&address, code);
 			BTreeMap::from_json(&s["storage"]).into_iter().foreach(|(k, v)| state.set_storage(&address, k, v));
 		});