Jet Corporation was organized on March 1, 20X2. 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 a company issues shares to its owners in exchange for cash, the cash account (an asset) increases, which is recorded as a debit. The increase in shareholders' equity due to the issuance of shares is recorded as contributed capital (or common stock), which is credited. Therefore, the correct entry is Cash (dr) $3,000; Contributed capital (cr) $3,000.

Jet Corporation Was Organized on March 1, 20X2