Jason Miller and Trevor Cane organize a partnership on January 1. Miller initially invests cash of $15,000 and equipment with a fair value of $80,000 with an outstanding note balance of $33,000 that the partnership assumes as debt. Cane initially invests $50,000 cash. The journal entry to record Miller's investment is:
A)Debit J.Miller, Capital $62,000; credit Cash $15,000; credit Equipment $47,000.
B)Debit Cash $15,000; debit Equipment $80,000; credit J.Miller, Capital $62,000; credit Notes Payable $33,000.
C)Debit Cash $15,000; debit Equipment $47,000; credit J.Miller, Capital $62,000.
D)Debit Cash $15,000; debit J.Miller, Capital $32,000; credit Equipment $80,000; credit Notes Payable $33,000.
E)Debit Cash $15,000; debit Equipment $80,000; credit J.Miller, Capital $95,000.

Question

Quizplus · Accepted Answer

The journal entry should include debiting Cash and Equipment at their respective fair values, crediting Notes Payable to assume the outstanding debt, and crediting J.Miller, Capital for the total investment. Therefore, option B correctly records the initial investment made by Jason Miller.

Jason Miller and Trevor Cane Organize a Partnership on January