Question

Sally Smith decided to start a sea shell business organized as a corporation. Her initial investment in the business consisted of $10,000 in cash in exchange for common stock. Record this transaction in the accounting equation of the new business by___________.

Answer 1

Answer:

Dr Cash Account and Cr Capital Account

Explanation:

Initial investment  of $10,000 is the capital injected by the owner of the business. This inflow will be credited as an equity capital of the company while the cash balance will be debited as it represent a cash inflow to the business.