The partnership entry should be as follows:
DEBIT CASH - $1000; DEBIT EQUIPMENT - $5000; CREDIT ACCOUNT PAYABLE: $500; CREDIT LAURA'S CAPITAL -$5,500.
An account payable refers to the amount of money that a company is owning an individual or a company and the amount involve is always recorded as a debit for the company. The new partnership company wants to pay Laura a sum of $500. to record this, the account payable will be credited with a sum of $500. Laura investments into the business, both in cash [$1000] and in equipment [$5,000] will be debited to the cash and equipment accounts respectively while her capital account will be credited with $5,500.
