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    kekebrown's Avatar
    kekebrown Posts: 20, Reputation: 0
    New Member
     
    #1

    Aug 29, 2008, 07:25 PM
    What is the journal entry?
    June 23 Cash 6,000
    ----------------------------------------------------------------------------------------------------
    Capital Stock 6,000
    ----------------------------------------------------------------------------------------------------- Invest cash in Able, Co.


    The journal Entry will:

    a. Increase Capital stock and decrease Cash
    b. Increase Cash and decrease Capital stock
    c. Increase Cash and increase Capital stock
    d. Decrease Cash and decrease Capital stock

    I think it is B
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
    Ultra Member
     
    #2

    Aug 30, 2008, 01:32 PM
    If you are investing Cash into the shares of a company, Able...

    THen your cash will go down, and your capital stock will go up.

    Therefore, answer A
    AdamUTsel's Avatar
    AdamUTsel Posts: 100, Reputation: 2
    Junior Member
     
    #3

    Sep 3, 2008, 12:41 PM
    Agree.

    Although, technically this question is poorly written.

    If you invest cash into a company, you would record:

    Dr: Investment in Company XYZ
    Cr: Cash

    The company you invested in would record:

    Dr. Cash
    Cr. Capital - Company XYZ

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