Question

Geraldine Parker, the owner of Gi Gi's Dance Studio, Inc., started the business by investing $10,000 cash and donating a building worth $20,000. What journal entry would be made to record this transaction?

Answer 1

The journal entry to record Geraldine Parker's investment in Gi Gi's Dance Studio, Inc. would include debits to cash and building, and a credit to the owner's capital account.

Step-by-step explanation:

The journal entry to record Geraldine Parker's investment in Gi Gi's Dance Studio, Inc. would be as follows:

1. Debit Cash - $10,000
2. Debit Building - $20,000
3. Credit Geraldine Parker, Capital - $30,000

This journal entry reflects the increase in assets (cash and building) and the corresponding increase in the owner's equity (Geraldine Parker's capital). The debits to Cash and Building represent the investments made by Geraldine, and the credit to Geraldine Parker, Capital records the increase in her ownership stake in the business.