Question

On July 1, R. Selleck and M. Monroe formed a partnership to provide legal services to clients. Selleck's investment is $10,000. Monroe's net investment is also $10,000, but it is comprised of cash ($15,000) and a note payable reflecting a bank loan for the new business ($5,000).

Required:
Record both investments in a single compound journal entry by selecting the account names and dollar amounts from the drop-down menus.

Answer 1

Answer and Explanation:

The journal entry is shown below:

Cash    Dr $25,000

           To Note payable   $5,000

          To Selleck Cap   $10,000

          To Monroe Cap $10,000

(Being the both investments are recorded)

Here we debited the cash as it increased the assets by $25,000 and credited the notes payable, Selleck, and the Monroe capital as it increased the liabilities and the stock holder equity