Mr.Bryant invested $50,000 cash in a new corporation.The new corporation will record this transaction with a debit to_____.
A)Retained Earnings and a credit to Cash for $50,000
B)Cash and a credit to Retained Income for $50,000
C)Paid-in Capital and a credit to Retained Earnings for $50,000
D)Cash and a credit to Paid-in Capital for $50,000

Question

Quizplus · Accepted Answer

When cash is invested in a corporation, it is recorded with a debit to Cash and a credit to Paid-in Capital. This is because Paid-in Capital represents the funds that have been contributed to the corporation by its investors. Retained Earnings on the other hand, represents the accumulated profits of the corporation that have not been distributed to its shareholders.

MrBryant Invested $50,000 Cash in a New Corporation