Question

Bloom and Plan organize a partnership on January 1. Bloom's initial investment consists of $800 cash, $1,700 equipment, and a $500 note payable reflecting a bank loan for the new business. Plants' initial investment is cash of $2,000. These amounts are the values agreed on by both partners. The journal entry to record Plant's investment is:

a. Debit Cash $1,500; debit Note Payable $500; credit Plant, Capital $2,000
b. Debit Cash $2,000; credit Note Payable $500; credit Plant, Capital $1,500
c. Debit Bloom, Capital $2,000; credit Cash $2,000
d. Debit Cash $2,500; credit Note Payable $500; credit Plant, Capital $2,500
e. Debit Cash $2,000; credit Plant, Capital $2,00

Answer 1

e. Debit Cash $2,000; credit Plant, Capital $2,00 0

Step-by-step explanation:

Since it is given that

The initial investment of the plant is $2,000 and to record this plant investment, the journal entry is

Cash Dr $2,000

To Plant, Capital $2,00 0

(Being the plant investment is recorded)

For recording this transaction, we debited the cash account as it increased the asset and at the same time it also increase the stockholder equity i.e capital account