Victor Cruz contributed $70,000 in cash and land worth $130,000 to open a new business,VC Consulting,in exchange for common stock.Which of the following general journal entries will VC Consulting make to record this transaction?
A)Debit Accounts Payable $200,000; Credit Common Stock,$200,000.
B)Credit 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)Debit 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 journal entry should reflect the two assets contributed by Victor Cruz - cash and land - in exchange for common stock. Therefore, the journal entry should debit cash for $70,000, debit land for $130,000, and credit common stock for $200,000. Option A is incorrect because there is no liability being created or paid off in this transaction. Option B is incorrect because cash and land cannot be credited - they must be debited since they are assets. Option D is incorrect because the common stock must be credited to reflect the issuance of stock in exchange for the assets. Option E is incorrect because it does not specify which assets are being credited.

Victor Cruz Contributed $70,000 in Cash and Land Worth $130,000