Question

Hansel and Gretel decide to organize a partnership. Hansel invests $15,000 cash, and Gretel contributes

$12,000 cash and equipment having a book value of $6,000 and a fair value of $9,000.

Choose the entry to record Gretel's investment in the partnership.

a.Cash....................................................................................... 12,000
Gretel, Capital ................................................. 12,000

b. Equipment ............................................................................ 6,000
Gretel, Capital .............................................. 6,000

c. Cash....................................................................................... 12,000
Equipment .................................................................... 6,000
Gretel, Capital ............................................... 18,000

d. Cash....................................................................................... 12,000
Equipment ...................................................................... 9,000
Gretel, Capital ................................................... 21,000

Answer 1

Answer:

c. Cash....................................................................................... 12,000

Equipment .................................................................... 6,000

Gretel, Capital .......

Explanation:

The journal entry is as follows;

Cash Dr $12,000

Equipment Dr $6,000

      To Gretel capital $18,000

(Being the investment done by gretel is recorded)

Here the cash  and equipment is debited as it increased the assets while on the other hand the capital account is credited as it also increased the shareholder equity

Therefore the option c is correct