Question

Nathan Long is entering into a partnership with Terri. Nathan is investing $2,000 in cash and equipment currently on Nathan’s books at $6,000, with an accumulated depreciation of $1,000. The equipment has a fair market value of $4,000. The entry to record Nathan’s investment should be which of the following?
A. Debit Cash $2,000; debit Equipment $6,000; credit Accumulated Depreciation $1,000; credit Nathan’s Capital $7,000
B. Debit Cash $2,000; debit Equipment $6,000; credit Accumulated Depreciation $2,000; credit Nathan’s Capital $6,000
C. Debit Nathan’s Capital $6,000; debit Accumulated Depreciation $2,000; credit Cash $2,000; credit Equipment $6,000
D. Debit Cash $2,000; debit Equipment $4,000; credit Nathan’s Capital $6,000

Answer 1

The answer is

D. Debit Cash $2,000; debit Equipment $4,000; credit Nathan’s Capital $6,000