Question

On October 1st, a company received $30,000 in cash and a building worth $200,000, and in return, issued common stock to an investor. Create the complete journal entry and post to the appropriate T-accounts.

Answer 1

1. Journal:

October 1:

Debit Cash $30,000

Debit Building $200,000

Credit Common Stock $230,000

To record the receipt of cash and building for common stock.

2. T-accounts:

Cash Account

Date Description Debit Credit Balance

Oct. 1 Common Stock $30,000 $30,000

Building Account

Oct. 1 Common Stock $200,000 $200,000

Common Stock

Oct. 1 Cash $30,000 $30,000

Oct. 1 Building $200,000 $200,000

Step-by-step explanation:

Journal entries show the accounts to be debited and credited respectively. They are the initial records of a business transaction. They can be used to post any transaction, make adjustments to the accounts, and close the accounts at the end of the accounting period.