Question

02 Journalize the following transaction:

1/2020 started business by contributing Ro 35,000
A) Cash 35,000, Capital 35,000
B) Capital 35,000, Cash 35,000
C) Accounts Receivable 35,000, Capital 35,000
D) Capital 35,000, Accounts Receivable 35,000

Answer 1

To record the owner's contribution of RO 35,000 to the business, the journal entry is a debit to Cash and a credit to Capital, indicating an increase in business assets and owner's equity.

Step-by-step explanation:

To journalize the transaction of starting a business by contributing RO 35,000, we need to identify which accounts are affected by the transaction. When an owner invests cash in their business, the cash account is debited because assets are increased. Concurrently, the owner's equity or capital account is credited, representing the owner's investment into the company. Therefore, the correct journal entry to record the contribution of RO 35,000 into the business is:

Dr. Cash 35,000

Cr. Capital 35,000

Thus, the correct answer is A) Cash 35,000, Capital 35,000. This entry shows an increase in the business's assets and an increase in the owner's equity.