[j_roch]

Question from text book for Carol's sole proprietorship.

Enter this into journal:
Opened an agency by investing the following assets at their fair market values: land 37,500 and building 112,500. The business should also assume responsibility for a 90,000 promissory note that was given to the bank to finance the purchase of the land and building.

My solution:
90,000 isn't enough to cover the cost of the land and building so I'm going to assume that Carol advanced 60,000 of her own money to buy the land and building. I think the journal entries should be
Land Acct DR 37,500
Building Acct DR 112,500
Promissary Notes Acct CR 90,000
Carol, Capitol Acct CR 60,000

Does anyone agree/disagree with my solution?

Then over time as Carol pays off the Promissory Note bit by bit we would
Promissary Notes Acct DR nnn
Cash Acct CR nnn
Yes?
As Carol pays off the note Carol's interest should increase so should we do anything with Carol, Capitol Acct?

[Just Looking]

Your entries look good. Carol's capital account will not increase. The value she provided was the $60,000 you recorded. Since the company assumed the promissory note, your entry is correct. It doesn't affect Carol's capital account since the company is paying off the note, not Carol.