Answer:
D. Cash is debited $5,000; capital is credited $5,000.
Explanation:
The action by Mr. Peabody will increase both cash and capital accounts by $5000 each. As per the accounting equation,( Assets = owners equity + liabilities) cash and capital are on the opposites sides. Cash is an asset, while capital is equity.
An increase in an asset is a debit, while an increase in capital is credited. In this case, the cash account will be debited by $5000, while the same amount will credit the capital account.
