Question

On February 3, 2016 Sam Singh invested $90,000 cash for a 1/3 interest in a newly formed partnership. Prepare the journal entry to record the transaction.

a) Debit Cash $90,000; Credit Sam Singh, Capital $90,000
b) Debit Cash $270,000; Credit Sam Singh, Capital $270,000
c) Debit Sam Singh, Capital $90,000; Credit Cash $90,000
d) Debit Sam Singh, Capital $270,000; Credit Cash $270,000

Answer 1

The correct journal entry to record Sam Singh's $90,000 investment for a 1/3 interest in a partnership is to debit Cash and credit Sam Singh, Capital, both for $90,000.

Step-by-step explanation:

The correct journal entry to record Sam Singh's investment in a newly formed partnership where he invested $90,000 cash for a 1/3 interest is: Debit Cash $90,000; Credit Sam Singh, Capital $90,000.

This reflects an increase in the partnership's cash account and acknowledges Sam Singh's contribution to the partnership's capital.