What is the journal entry?

Question

June 23 Cash 6,000

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Capital Stock 6,000

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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

Answer 1

i can't tell from the 2 entries which is the debit and credit. however based on the note 'invest cash' it looks like it's credit cash, debit capital stock.

as cash is asset item which has debit nature, crediting cash (asset) means a decrease in cash.

as capital stock is an equity item which has debit nature, debiting capital stock (equity) means an increase in capital stock.

the answer is therefore a