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Which of the Following Entries Below would be Included in the Accounting Transaction to Record the Following Business Transaction? Our Business Received \( \$ 100,000 \) Cash and \( \$ 75,000 \) worth of Equipment from Investors in Exchange for Common Stock Ownership in the Business. Credit to Common Stock for \( \$ 175,000 \) Credit to Equipment for \( \$ 75,000 \) Debit to Dividends for \( \$ 100,000 \) Debit to Cash for \( \$ 25,000 \) Debit to Equipment for \( \$ 75,000 \) Debit to Cash for \( \$ 100,000 \) Debit to Retained Earnings \( \$ 175,000 \)

Ask by Chang Guerrero. in the United States
Mar 12,2025

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Answer

The correct accounting entries are: - **Credit to Common Stock for \$175,000** - **Debit to Equipment for \$75,000** - **Debit to Cash for \$100,000**

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Bonus Knowledge

When investors provide both cash and equipment in exchange for common stock, it reflects a strong commitment to the business! In accounting terms, this results in a transaction where you increase your cash and equipment assets and also recognize an increase in equity through common stock. The correct entry would include the debit for cash and equipment received and the credit for the common stock issued. Understanding the double-entry system is key here! Each transaction affects at least two accounts, maintaining the accounting equation (Assets = Liabilities + Shareholders' Equity). In this transaction, you would debit Cash for \( \$ 100,000 \) and Equipment for \( \$ 75,000 \) while crediting Common Stock for \( \$ 175,000 \), capturing that wonderful new investment efficiently!

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