Laura's investment in a new partnership includes $1,000 cash and $5,000 equipment.The new partnership is assuming $500 of Laura's accounts payable.The partnership entry should be to:

Question

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In a partnership, when a partner contributes assets, the partnership entry should be a debit to the corresponding asset account and a credit to the partner's capital account. In this case, Laura is contributing $1,000 cash and $5,000 equipment, so we need to debit Cash for $1,000, debit Equipment for $5,000, and credit Laura, Capital for $5,500 ($1,000 + $5,000 - $500). Since the partnership is assuming $500 of Laura's accounts payable, we also need to credit Accounts Payable for $500. Therefore, choice C is the correct entry. Choice A is incorrect as it only debits Laura, Capital for $5,500 and does not credit Accounts Payable. Choice B is incorrect as it does not credit Accounts Payable. Choice D is incorrect as it does not debit Cash or Equipment.

Laura's Investment in a New Partnership Includes $1,000 Cash and $5,000