Jet Corporation was organized on March 1, 20B. Jet Corporation issued shares to each of the six owners who paid in a total of $3,000 cash. On the basis of transaction analysis, the following entry should be recorded in the accounts (dr = debit and cr = credit)

Question

Quizplus · Accepted Answer

When shares are issued to owners in exchange for cash, the company's cash account increases, and the owners' equity account (Contributed capital) also increases. Therefore, the correct entry would be to debit Cash and credit Contributed capital. Option B is the correct entry. Option A and C both debit a shareholders' equity account, which is incorrect. Option D does not make sense since revenue is earned through the sale of goods or services, and not through the issuance of shares.

Jet Corporation Was Organized on March 1, 20B