Chao Xu starts a consulting business called Networkers.Xu invests $10,000 cash and $5,000 of equipment in Networkers in exchange for its common stock.How would Networkers record this transaction?
A)Cash increases by $10,000,Equipment increases by $5,000,and Consulting Revenue increases by $15,000.
B)Cash increases by $10,000,Equipment increases by $5,000,and Consulting Revenue decreases by $15,000.
C)Cash increases by $10,000,Equipment increases by $5,000,and Common Stock decreases by $15,000.
D)Cash increases by $10,000,Equipment increases by $5,000,and Common Stock increases by $15,000.
E)Cash increases by $10,000,Equipment decreases by $5,000,and Common Stock increases by $5,000.

Question

Quizplus · Accepted Answer

When Chao Xu invests $10,000 cash and $5,000 of equipment in exchange for common stock in Networkers, Networkers will record the transaction as:
Cash increases by $10,000 (debit)
Equipment increases by $5,000 (debit)
Common Stock increases by $15,000 (credit)

Chao Xu Starts a Consulting Business Called Networkers