Rodriguez and Ying start a partnership business on July 1, 2014. Rodriguez brings in cash worth $4,000, furniture with a current market value of $50,000, payables with a current market value of $15,000 and equipment with a current market value of $26,000. Which of the following is the correct journal entry to record the above transaction?

Question

Quizplus · Accepted Answer

The journal entry to record Rodriguez's contribution to the partnership is:
Cash                  $4,000
Furniture              50,000
Payables              (15,000)
Equipment              26,000
Rodriguez, Capital   $65,000

Option A is incorrect because it does not take into account the value of furniture and equipment contributed by Rodriguez.
Option C is incorrect because it only accounts for the cash contribution by Rodriguez and does not include the value of furniture and equipment.
Option D is incorrect because it incorrectly assumes that payables are an asset, when in fact they are a liability.

Rodriguez and Ying Start a Partnership Business on July 1