Mr. Decker invested $20,000 in cash in his new business. How does the company record the investment?

(A) credit Cash and debit Owner's Equity

(B) credit Cash and debit Retained Earnings

(C) credit Cash and debit Investments

(D) debit Cash and credit Owner's Equity

(E) debit Cash and credit Retained Earnings

Question

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Business

20 September, 01:34

Mr. Decker invested $20,000 in cash in his new business. How does the company record the investment?

(A) credit Cash and debit Owner's Equity

(B) credit Cash and debit Retained Earnings

(C) credit Cash and debit Investments

(D) debit Cash and credit Owner's Equity

(E) debit Cash and credit Retained Earnings

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Answers (1)

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Chase · Answer 1

The company records the investment by the entry:

(D) debit Cash and credit Owner's Equity

Explanation:

Mr. Decker invested $20,000 in cash in his new business. He is the Owner of the company.

In the case, the company that he invested received cash from Mr. Decker.

The company will record the increasing in cash and increasing in Owner's Equity account by the journal entry:

Debit Cash $20,000

Credit Owner's Equity $20,000