7. Help me selecting the right answer. Thank you **Gardens, Inc. Financial Transaction Analysis**Gardens, Inc. invests its excess cash in Innovative Technologies, Inc. The company acquires 2,700 shares at a price of $29.50 per share, making a total investment of $79,650. Since Gardens, Inc. holds less than 5% of Innovative's voting stock, they plan to retain the stock for a duration of two years. The task is to identify the correct journal entry for this transaction from the options below:1. **Option 1:** - Debit: Equity Investments $79,650 - Credit: Cash $79,6502. **Option 2:** - Debit: Common Stock - Gardens $79,650 - Credit: Cash $79,6503. **Option 3:** - Debit: Cash $79,650 - Credit: Equity Investments $79,6504. **Option 4:** - Debit: Cash $79,650 - Credit: Common Stock - Gardens $79,650**Explanation of the Correct Journal Entry:**The correct journal entry for the transaction where Gardens, Inc. uses cash to acquire an equity investment is typically a debit to "Equity Investments," reflecting the increase in assets due to the acquisition, and a credit to "Cash," reflecting the decrease in cash as it is used to purchase the shares. This is represented by **Option 1**:- **Equity Investments** $79,650 (Debit)- **Cash** $79,650 (Credit)

As per the rule of Accounting, assets and expenses are debited when they increased and credited when…

Gardens, Inc. invests its excess cash in Innovative Technologies, Inc. and acquires 2,700 shares for $29.50 per share. Garden, Inc. owns less than 5% of Innovative's voting stock and plans to hold the stock for two years. Which of the following is the correct journal entry for the transaction? O Equity Investments 79,650 Cash O Common Stock - Gardens Cash O Cash Equity Investments O Cash Common Stock - Gardens 79,650 79,650 79,650 79,650 79,650 79,650 79,650

Gardens, Inc. invests its excess cash in Innovative Technologies, Inc. and acquires 2,700 shares for $29.50 per share. Garden, Inc. owns less than 5% of Innovative's voting stock and plans to hold the stock for two years. Which of the following is the correct journal entry for the transaction? O Equity Investments 79,650 Cash O Common Stock - Gardens Cash O Cash Equity Investments O Cash Common Stock - Gardens 79,650 79,650 79,650 79,650 79,650 79,650 79,650

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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