Question

Victor Cruz contributed $92,000 in cash and land worth $174,000 to open a new business, VC Consulting, in exchange for common stock. Which of the following general journal entries will VC Consulting make to record this transaction?

a. debit cash 77,000; debit land 144,000; common stock 221,000
b. debit common stock 122,000; credit assets 221,000
c. debit common stock 221,000; credit cash 77,000; credit land 144,000
d. credit cash and land 221,000; common stock 221,000
e. debit accounts payable 221,000 common stock 221,000

Answer 1

Debit cash 77,000; debit land 144,000; common stock 221,000 will VC Consulting make to record this transaction.

Explanation:

The General Journal is the business publication in which all activities that have been held by the company, such as a purchase document, selling journal, cash journal, etc, not been registered in any of its specialist papers.

There are two different accounts, called credit and debits, for all transactions. Therefore, if a transaction is reported in a document, one account is debited and the other paid.

For example: if a business buys an inventory of $5000 using currency. An entry would be made in the report, which decreases cash account by $5,000 and raises the product account by $5,000.