Question

Mr. Decker invested $20,000 in cash in his business.

How does the company record the investment?

Answer 1

The company records the investment by the entry:

debit Cash and credit Owner's Equity

Step-by-step explanation:

Mr. Decker invested $20,000 in cash in his new business. He is the Owner of the company.

In the case, the company that he invested received cash from Mr. Decker.

The company will record the increasing in cash and increasing in Owner's Equity account by the journal entry:

Debit Cash $20,000

Credit Owner's Equity $20,000