Transaction 1 On March 1, each of three former classmates invested $14,000 in ca

Question

Transaction 1
On March 1, each of three former classmates invested $14,000 in cash in exchange for 1,000 shares of stock each.

Account:    CashAccounts ReceivableInventoryPrepaid RentFixtures and EquipmentAccounts PayableInterest PayableWages PayableNotes PayablePaid-in CapitalRetained EarningsLeave Blank          Dollar amount:   

Account:    CashAccounts ReceivableInventoryPrepaid RentFixtures and EquipmentAccounts PayableInterest PayableWages PayableNotes PayablePaid-in CapitalRetained EarningsLeave Blank          Dollar amount:   

Please help. I don't know what i did wrong.

Explanation / Answer

The Answer is wrong

The correct Entry is

Cash Account $42000

To Paid in Capital Account $42000

(Being 1000 shares purchased by each classmate)

Working: each paid 14000.Hence,total cash paid = 14000 x 3 = 42000

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