MC Qu. 115 Bloom and Plant organize a partnership... Bloom and Plant organize a
ID: 2331680 • Letter: M
Question
MC Qu. 115 Bloom and Plant organize a partnership...
Bloom and Plant organize a partnership on January 1. Bloom's initial investment consists of $1,450 cash, $5,800 equipment and a $1,100 note payable reflecting a bank loan for the new business. Plant's initial investment is cash of $6,150. These amounts are the values agreed on by both partners. The journal entry to record Bloom's investment is:
Multiple Choice
Debit Cash $1,450; debit Equipment $5,800; credit Note Payable $1,100; credit Bloom, Capital $6,150.
Debit Cash $6,150; credit Bloom, Capital $6,150.
Debit Cash $1,450; debit Equipment $5,800; credit Bloom, Capital $7,400.
Debit Cash $1,450; debit Equipment $4,700; credit Bloom, Capital $6,150.
Debit Bloom, Capital $8,350; credit Common Stock $8,350.
Explanation / Answer
correct option is B
since, Bloom has invested the cash towards partnership.
cash (asset) has increased and capital (plant) has increased.
Following is the journal entry:
Dr cash $6,150
bloom capital $6,150
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