Richard Redden contributed $70,000 in cash and land worth $130,000 to open a new business, RR Consulting, Inc. Which of the following general journal entries will RR Consulting, Inc. make to record this transaction?
A) Debit Assets $200,000; credit Common Stock, $200,000.
B) Debit Cash and Land, $200,000; credit Common Stock, $200,000.
C) Debit Cash $70,000; debit Land $130,000; credit Common Stock, $200,000.
D) Debi Common Stock, $200,000; credit Cash $70,000, credit Land, $130,000.
E) Debit Common Stock, $200,000; credit Assets, $200,000.

Question

Quizplus · Accepted Answer

The transaction involves contributions of both cash and land, so they should be recorded separately. The cash should be debited for $70,000, the land should be debited for $130,000, and the common stock account should be credited for the total amount of $200,000. This entry properly records the contributions made by Richard Redden and establishes the basic accounting equation of Assets = Liabilities + Equity.

Richard Redden Contributed $70,000 in Cash and Land Worth $130,000