Question

Laura’s investment in a new partnership includes $1,000 in cash and $5,000 of equipment. The new partnership is assuming $500 of Laura’s accounts payable. The partnership entry should be which of the following?
A. Debit Laura’s Capital $5,500; debit Accounts Payable $500; credit Cash $1,000; credit Equipment $5,000
B. Debit Cash $1,000; debit Equipment $5,000; credit Laura’s Capital $6,000
C. Debit Cash $1,000; debit Equipment $5,000; credit Accounts Payable $500; credit Laura’s Capital $5,500
D. Debit Laura’s Investment $5,500; credit Capital $5,500

Answer 1

option B (as only cash and Equipments have been brought as capital)