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The owner invested personal equipment in the business
The owner invested personal equipment in the business.
To record this transaction:
a. debit Equipment and credit Accounts Payable.
b. debit Accounts Payable and credit Equipment.
c. debit Equipment and credit Capital.
d. credit Equipment and debit Capital.
Expert Solution
The correct answer is letter c. debit Equipment and credit Capital.
The transaction refers to the investment of the owner in the business
Letter a is wrong because an investment is not a liability for the company
Letter b is wrong because equipment should be debited and accounts payable has no relation to the transaction
Letter d is wrong because of the letter c
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