Question

Aracel Engineering completed the following transactions in the month of June. a. Jenna Aracel, the owner, invested $175,000 cash, office equipment with a value of $8,100, and $63,000 of drafting equipment to launch the company in exchange for common stock. b. The company purchased land worth $58,000 for an office by paying $8,800 cash and signing a long-term note payable for $49,200. c. The company purchased a portable building with $56,000 cash and moved it onto the land acquired in b. d. The company paid $2,200 cash for the premium on an 18-month insurance policy. e. The company completed and delivered a set of plans for a client and collected $9,700 cash. f. The company purchased $34,000 of additional drafting equipment by paying $11,200 cash and signing a long-term note payable for $22,800. 9. The company completed $19,000 of engineering services for a client. This amount is to be received in 30 days. h. The company purchased $1,500 of additional office equipment on credit. I. The company completed engineering services for $21,000 on credit. J. The company received a bill for rent of equipment that was used on a recently completed job. The $1,467 rent cost must be paid k. The company collected $6,000 cash in partial payment from the client described in transaction g. 1. The company paid $1,300 cash for wages to a drafting assistant m. The company paid $1,500 cash to settle the account payable created in transaction h. n. The company paid $1,005 cash for minor maintenance of its drafting equipment o. The company pola $10,770 cash in dividends, p. The company paid $1,300 cash for wages to a drafting assistant 9. The company paid $3,300 cash for advertisements on the Web during June. Required: 1. Prepare general journal entries to record these transactions using the following titles: Cash (101); Accounts Receivable (106); Prepaid Insurance (108)Office Equipment (163); Drafting Equipment (164); Building (170); Land (172); Accounts Payable (201); Notes Payable (250); Common Stock (307); Dividends (319); Engineering Fees Earned (402); Wages Expense (601); Equipment Rental Expense (602); Advertising Expense (603); and Repairs Expense (604). 2. Post the journal entries from part 1 to the ledger accounts. 3. Prepare a trial balance as of the end of June.

Answer 1

1. Journal Entries -

Date a Aracel Engineering Journal Entries Accounts Title Debit Credit Cash $ 175,000 Office Equipments $ 8,100 Drafting Equipments $ 63,000 Jenna Aracel, Capital $ 246,100 (Being Cash and office eqiupments introduced) b Land $ 58,000 Notes Payable (Long Term) Cash (Being Land purchased) $ 49,200 $ 8,800 с Building $ 56,000 Cash (Being Portable building purchased) $ 56,000 d Prepaid Insurance $ 2,200 Cash (Being insurance paid for 18 months) $ 2,200 e Cash $ 9,700 Engineering Fees Earned (Being Fees Earned) $ 9,700 f Drafting Equipments $ 34,000 Cash Notes Payable (Long Term) (Being drafting equipment purchased) $ 11,200 $ 22,800 Accounts Receivable $ 19,000 Engineering Fees Earned (Being Fees Earned on account) $ 19,000 h Office Equipment $ 1,500 Accounts Payable $ 1,500 (Being Office equipment purchased on account) i Accounts Receivable $ 21,000 Engineering Fees Earned (Being Fees Earned on account) $ 21,000 j Equipment rental Expenses $ 1,467 Accounts Payable $ 1,467 (Being Rental Expense on equipment incurred) k Cash $ 6,000 Accounts Receivable (Being payment received on account) $ 6,000 1 Wages Expense $ 1,300 Cash (Being Wages Paid) $ 1,300 m Accounts Payable $ 1,500 Cash (Being payment made on account) $ 1,500 n Repair Expense $ 1,005 Cash (Being minor repair expense incurred) $ 1,005 o Dividend $ 10,770 Cash (Being Cash withdrawl for personal use) $ 10,770 p Wages Expense $ 1,300 Cash $ 1,300 (Being Wages Paid) q Advertising Expense $ 3,300 Cash $ 3,300 (Being Advertising Expense paid)

2. Ledgers -

a b Notes Payable (Long Term) $ 49,200 $ 22,800 b e с f k d f cl Bal $ 72,000 Cash $ 175,000 $8,800 $ 9,700 $ 56,000 $ 6,000 $ 2,200 $ 11,200 $ 1,300 $ 1,500 $ 1,005 $ 10,770 $ 1,300 $ 3,300 I m n Jenna Aracel, Capital $ 246,100 a p q cl Bal $ 246,100 Cl Bal $ 93,325 Dividends $ 10,770 $190,700 $190,700 o cl Bal $ 10,770 Prepaid Insurance $ 2,200 d Cl Bal $ 2,200 e Engineering Fees Earned $ 9,700 $ 19,000 $ 21,000 g i Accounts Receivable $ 19,000$ 6,000 $ 21,000 k cl Bal $ 49,700 i cl Bal $ 34,000 Equipment rental Expenses $ 1,467 j Land Cl Bal $ 1,467 b $ 58,000 Cl Bal $ 58,000 1 Wages Expense $ 1,300 $ 1,300 p Building $ 56,000 C cl Bal $ 2,600 Cl Bal $ 56,000 Repair Expense $ 1,005 n cl Bal $ 1,005 a h Office Equipments $ 8,100 $ 1,500 cl Bal $ 9,600 Advertising Expense $ 3,300 q cl Bal $ 3,300 a f Drafting Equipments $ 63,000 $ 34,000 cl Bal $ 97,000 m Accounts Payable $ 1,500 $ 1,500 $ 1,467 h j cl Bal $ 1,467

3. Trial Balance -

Credit Aracel Engineering Trial Balance June 30 Accounts Title Debit Cash $ 93,325 Prepaid Insurance $ 2,200 Accounts Receivable $ 34,000 Land $ 58,000 Building $ 56,000 Office Equipments $ 9,600 Drafting Equipments $ 97,000 Accounts Payable Notes Payable (Long Term) Jenna Aracel, Capital Dividends $ 10,770 Engineering Fees Earned Equipment rental Expenses $ 1,467 Wages Expense $ 2,600 Repair Expense $ 1,005 Advertising Expense $ 3,300 $ 1,467 $ 72,000 $ 246,100 $ 49,700 Total $369,267 $ 369,267