Question

Aracel Engineering completed the following transactions in the month of June.

1. Jenna Aracel, the owner, invested $155,000 cash, office equipment with a value of $7,100, and $73,000 of drafting equipment to launch the company.
2. The company purchased land worth $55,000 for an office by paying $7,500 cash and signing a long-term note payable for $47,500.
3. The company purchased a portable building with $55,000 cash and moved it onto the land acquired in b.
4. The company paid $2,800 cash for the premium on an 18-month insurance policy.
5. The company completed and delivered a set of plans for a client and collected $9,300 cash.
6. The company purchased $29,000 of additional drafting equipment by paying $10,300 cash and signing a long-term note payable for $18,700.
7. The company completed $15,000 of engineering services for a client. This amount is to be received in 30 days.
8. The company purchased $2,000 of additional office equipment on credit.
9. The company completed engineering services for $22,000 on credit.
10. The company received a bill for rent of equipment that was used on a recently completed job. The $1,548 rent cost must be paid within 30 days.
11. The company collected $7,000 cash in partial payment from the client described in transaction g.
12. The company paid $2,200 cash for wages to a drafting assistant.
13. The company paid $2,000 cash to settle the account payable created in transaction h.
14. The company paid $1,130 cash for minor maintenance of its drafting equipment.
15. Jenna Aracel withdrew $9,120 cash from the company for personal use.
16. The company paid $1,700 cash for wages to a drafting assistant.
17. The company paid $3,000 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); J. Aracel, Capital (301); J. Aracel, Withdrawals (302); 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.
101: Cash Debit Credit 106: Accounts Receivable Debit Credit Transaction Balance Transaction Balance 108: Prepaid Insurance Debit Credit 163: Office Equipment Debit Credit Transaction Balance Transaction Balance 164: Drafting Equipment Debit Credit 170: Building Debit Credit Transaction Balance Transaction Balance

Answer 1

Credit SI. No a) 1. Journal Entries Particulars Cash (101) Alc Dr Office Equipment (163) A/C Dr Drafting Equipment (164) A/c Dr To J. Arcel's Capital (301) Alc (Being Investment brought as capital) $ $ $ Debit 1,55,000 7,100 73,000 $ 2,35,100 b) $ 55,000 Land (172) AC Dr To Cash (101) A/C To Notes Payable (250) A/c (Being purchased land with cash and notes payable) $ $ 7,500 47,500 C) Dr $ 55,000 Building (170) A/C To Cash (101) A/C (Being purchased building with cash) $ 55,000 d) $ 2,800 $ 2,800 Prepaid Insurance (108) Alc Dr To Cash (101) A/C (Being premium paid for insurance policy for 18 months) e) $ 9,300 Cash (101) A/C Dr To Engineering Fees Earned (402) A/C $ 9,300 (Being cash received for engineering services) $ 29,000 Drafting Equipment (164) A/C Dr To Cash (101) A/C To Notes Payable (250) A/C (Being asset purchased through cash and notes payable) $ $ 10,300 18,700 Dr $ 22,000 Accounts Receivable (106) A/C To Engineering Fees Earned (402) A/c $ 22,000 (Being fees earned for the services rendered) h) Dr $ 1,548 Equipment Rental Expense (602) A/C To Accounts payable (201) A/C (Being rent expense accrued and due) $ 1,548

SI. No Credit Debit 7,000 i) 1. Journal Entries Particulars Cash (101) A/C Dr To Accounts Receivable (106) A/C (Being amount received from receivables) $ $ 7,000 Dr $ 2,200 Wages Expense (601) Alc To Cash (101) A/C (Being wages paid to drafting assistant) $ 2,200 k) Dr $ 2,000 Accounts payable (201) A/C To Cash (101) A/C $ 2,000 (Being amount paid for the accounts payable) 1) Dr $ 1,130 Repairs Expense (604) Alc To Cash (101) A/C (Being expense incurred and paid) $ 1,130 m) $ 9,120 J. Arcel, withdrawls (302) A/C Dr To Cash (101) A/C (Being withdrawl of cash for personal use) $ 9,120 n) $ 1,700 Wages Expense (601) A/c Dr To Cash (101) A/C (Being wages paid to drafting assistant) $ 1,700 0) Dr $ 3,000 Advertising Expense (603) A/C To Cash (101) A/C (Being expense incurred and paid) $ 3,000

2) posting the journal entries from part 1 to the ledger accounts as specified in the question: Note : The balance column depicts the balance in the previous row plus the effect of transaction i.e., net balance. Also, balances of the assets and liabilites will be carried forward and expenses for the period will be transferred to the profit and loss account at the end of the year end. Balance mentioned in bold is the final balance for the aforesaid transactions. Transaction Capital Brought in Paid for land Paid for building Paid for Insurance Fees Earned Paid for equipment Received from customer Wages paid Paid to accounts payable 101 : Cash Alc Debit $ 1,55,000 $ $ $ $ $ $ $ $ 9,300 $ $ $ $ 7,000 $ $ $ $ $ Credit Balance $ 1,55,000 7,500 $ 1,47,500 55,000 $ 92,500 2,800 $ 89,700 $ 99,000 10,300 $ 88,700 $ 95,700 2,200 $ 93,500 2,000 $ 91,500 Repairs expense paid onwer drawings Wages paid Advertising expense paid $ $ $ $ $ $ 1,130 $ 9,120 $ 1,700 $ 3,000 $ 90,370 81,250 79,550 76,550 $ $ 106 : Accounts receivable Alc Transaction Debit Credit Income accrued $ 22,000 $ $ Received from customer $ $ 7,000 $ Balance 22,000 15,000 Transaction Amount paid 108 : Prepaid Insurance A/c Debit Credit $ 2,800 $ Balance $ 2,800

163 : Office Equipment Alc Debit Credit Transaction Balance Capital Brought in $ 7,100 $ $ 7,100 Transaction Capital Brought in Purchased 164 : Drafting Equipment Alc Debit Credit $ 73,000 $ $ 29,000 $ Balance $ 73,000 $ 1,02,000 170 : Building A/c Debit $ 55,000 Transaction Purchased Credit Balance 55,000 0 $ 172: Land Alc Debit Transaction Credit Balance Purchased $ 55,000 0 $ 55,000 201 : Accounts Payable A/c Transaction Debit Credit Balance Rental expense accured $ $ 1,548 $ 1,548 Amount paid $ 2,000 $ $ -452 Transaction Purchased land Purchased equipment 250 : Notes Payable Alc Debit Credit Balance $ $ 47,500 $ 47,500 $ $ 18,700$ 66,200 Transaction Capital brought in 301 : J. Aracel, Capital Alc Debit Credit Balance $ $ 2,35,100 $ 2,35,100

Transaction Capital withdrawn 302 : J. Aracel, withdrawls A/c Debit Credit $ 9,120$ Balance $ 9,120 402 : Engineering Fees Earned A/c Transaction Debit Credit Income earned $ $ 9,300 $ Income accrued $ $ 22,000 $ Balance 9,300 31,300 601 : Wages Expense A/c Transaction Debit Credit Expense incurred and paid $ 2,200 $ Expense incurred and paid $ 1,700 $ Balance $ 2,200 $ 3,900 602 : Equipment Rental Expense A/c Transaction Debit Credit Expense Accrued $ 1,548$ Balance $ 1,548 603 : Advertising Expense A/c Transaction Debit Credit Expense incurred and paid $ 3,000 $ Balance $ 3,000 604 : Repairs Expense A/c Transaction Debit Credit Expense incurred and paid $ 1,130$ Balance $ 1,130
1) Journal Entries:

1. Journal Entries
Sl. No	Particulars	Debit	Credit
a)	Cash (101) A/c Dr	$   1,55,000
	Office Equipment (163) A/c          Dr	$        7,100
	Drafting Equipment (164) A/c       Dr	$      73,000
	To J. Arcel, Capital (301) A/c		$   2,35,100
	(Being Investment brought as capital)
b)	Land (172) A/c Dr	$      55,000
	To Cash (101) A/c		$        7,500
	To Notes Payable (250) A/c		$      47,500
	(Being purchased land with cash and notes payable)
c)	Building (170) A/c                        Dr	$      55,000
	To Cash (101) A/c		$      55,000
	(Being purchased building with cash)
d)	Prepaid Insurance (108) A/c         Dr	$        2,800
	To Cash (101) A/c		$        2,800
	(Being premium paid for insurance policy for 18 months)
e)
	Cash (101) A/c                            Dr	$        9,300
	To Engineering Fees Earned (402) A/c		$        9,300
	(Being cash received for engineering services)
f)	Drafting Equipment (164) A/c       Dr	$      29,000
	To Cash (101) A/c		$      10,300
	To Notes Payable (250) A/c		$      18,700
	(Being asset purchased through cash and notes payable)
g)	Accounts Receivable (106) A/c          Dr	$      22,000
	To Engineering Fees Earned (402) A/c		$      22,000
	(Being fees earned for the services rendered)
h)	Equipment Rental Expense (602) A/c      Dr	$        1,548
	To Accounts payable (201) A/c		$        1,548
	(Being rent expense accrued and due)
i)	Cash (101) A/c                                  Dr	$        7,000
	To Accounts Receivable (106) A/c		$        7,000
	(Being amount received from receivables)
j)	Wages Expense (601) A/c                 Dr	$        2,200
	To Cash (101) A/c		$        2,200
	(Being wages paid to drafting assistant)
k)	Accounts payable (201) A/c              Dr	$        2,000
	To Cash (101) A/c		$        2,000
	(Being amount paid for the accounts payable)
l)	Repairs Expense (604) A/c                Dr	$        1,130
	To Cash (101) A/c		$        1,130
	(Being expense incurred and paid)
m)	J. Arcel, withdrawls (302) A/c           Dr	$        9,120
	To Cash (101) A/c		$        9,120
	(Being withdrawl of cash for personal use)
n)	Wages Expense (601) A/c                 Dr	$        1,700
	To Cash (101) A/c		$        1,700
	(Being wages paid to drafting assistant)
o)	Advertising Expense (603) A/c          Dr	$        3,000
	To Cash (101) A/c		$        3,000
	(Being expense incurred and paid)

2) posting the journal entries from part 1 to the ledger accounts as specified in the question:

Note : The balance column depicts the balance in the previous row plus the effect of transaction i.e., net balance .

Also, balances of the assets and liabilites will be carried forward and expenses for the period will be transferred to the profit and loss account at the end of the year end.

Balance mentioned in bold is the final balance for the aforesaid transactions.

101 : Cash A/c
Transaction	Debit	Credit	Balance
Capital Brought in	$    1,55,000	$               -	$    1,55,000
Paid for land	$               -	$         7,500	$    1,47,500
Paid for building	$               -	$       55,000	$       92,500
Paid for Insurance	$               -	$         2,800	$       89,700
Fees Earned	$         9,300	$               -	$       99,000
Paid for equipment	$               -	$       10,300	$       88,700
Received from customer	$         7,000	$               -	$       95,700
Wages paid	$               -	$         2,200	$       93,500
Paid to accounts payable	$               -	$         2,000	$       91,500
Repairs expense paid	$               -	$         1,130	$       90,370
onwer drawings	$               -	$         9,120	$       81,250
Wages paid	$               -	$         1,700	$       79,550
Advertising expense paid	$               -	$         3,000	$       76,550

106 : Accounts receivable A/c
Transaction	Debit	Credit	Balance
Income accrued	$       22,000	$               -	$       22,000
Received from customer	$               -	$         7,000	$       15,000

108 : Prepaid Insurance A/c
Transaction	Debit	Credit	Balance
Amount paid	$         2,800	$               -	$         2,800

163 : Office Equipment A/c
Transaction	Debit	Credit	Balance
Capital Brought in	$         7,100	$               -	$         7,100

164 : Drafting Equipment A/c
Transaction	Debit	Credit	Balance
Capital Brought in	$       73,000	$               -	$       73,000
Purchased	$       29,000	$               -	$    1,02,000

170 : Building A/c
Transaction	Debit	Credit	Balance
Purchased	$       55,000	0	$       55,000

172 : Land A/c
Transaction	Debit	Credit	Balance
Purchased	$       55,000	0	$       55,000

201 : Accounts Payable A/c
Transaction	Debit	Credit	Balance
Rental expense accured	$               -	$         1,548	$         1,548
Amount paid	$         2,000	$               -	$           -452

250 : Notes Payable A/c
Transaction	Debit	Credit	Balance
Purchased land	$               -	$       47,500	$       47,500
Purchased equipment	$               -	$       18,700	$       66,200

301 : J. Aracel, Capital A/c
Transaction	Debit	Credit	Balance
Capital brought in	$               -	$    2,35,100	$    2,35,100

302 : J. Aracel, withdrawls A/c
Transaction	Debit	Credit	Balance
Capital withdrawn	$         9,120	$               -	$         9,120

402 : Engineering Fees Earned A/c
Transaction	Debit	Credit	Balance
Income earned	$               -	$         9,300	$         9,300
Income accrued	$               -	$       22,000	$       31,300

601 : Wages Expense A/c
Transaction	Debit	Credit	Balance
Expense incurred and paid	$         2,200	$               -	$         2,200
Expense incurred and paid	$         1,700	$               -	$         3,900

602 : Equipment Rental Expense A/c
Transaction	Debit	Credit	Balance
Expense Accrued	$         1,548	$               -	$         1,548

603 : Advertising Expense A/c
Transaction	Debit	Credit	Balance
Expense incurred and paid	$         3,000	$               -	$         3,000
604 : Repairs Expense A/c
Transaction	Debit	Credit	Balance
Expense incurred and paid	$         1,130	$               -	$         1,130