Question

Problem 2-2A Preparing and posting journal entries; preparing a trial balance LO C3, 1 at Aracel Engineering completed the following transactions in the month of June. a. Jenna Aracel, the owner, invested $230,000 cash, office equipment with a value of $9,200, and $71,000 of drafting equipment to launch the company b. The company purchased land worth $55,000 for an office by paying $7,000 cash and signing a long-term note payable for $48,000. c. The company purchased a portable building with $58,000 cash and moved it onto the land acquired in b. d. The company paid $3,200 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 $9,000 cash. f. The company purchased $23,000 of additional drafting equipment by paying $11,200 cash and signing a long-term note payable for $11,800. g. The company completed $18,000 of engineering services for a client. This amount is to be received in 30 days. h. The company purchased $1,550 of additional office equipment on credit. I. The company completed engineering services for $24,000 on credit. J. The company received a bill for rent of equipment that was used on a recently completed job. The $1530 rent cost must be paid within 30 days k. The company collected $6,000 cash in partial payment from the client described in transaction g. 1. The company paid $1,700 cash for wages to a drafting assistant. m. The company paid $1,550 cash to settle the account payable created in transaction h. n. The company paid $1,155 cash for minor maintenance of its drafting equipment, o. Jenna Aracel withdrew $9,300 cash from the company for personal use. p. The company paid $1,100 cash for wages to a drafting assistant. 4. The company paid $2,800 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 Eamed (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 а Aracel Engineering Journal Entries Accounts Title Debit Credit Cash $ 230,000 Office Equipments $ 9,200 Drafting Equipments $ 71,000 Jenna Aracel, Capital $310,200 (Being Cash and office eqiupments introduced) b Land $ 55,000 Notes Payable (Long Term) Cash (Being Land purchased) $ 48,000 $ 7,000 с Building $ 58,000 Cash (Being Portable building purchased) $ 58,000 d Prepaid Insurance $ 3,200 Cash (Being insurance paid for 18 months) $ 3,200 Cash $ 9,000 $ 9,000 Engineering Fees Earned (Being Fees Earned) f Drafting Equipments $ 23,000 Cash Notes Payable (Long Term) (Being drafting equipment purchased) $ 11,200 $ 11,800 Accounts Receivable $ 18,000 Engineering Fees Earned (Being Fees Earned on account) $ 18,000 h Office Equipment $ 1,550 Accounts Payable $ 1,550 (Being Office equipment purchased on account) i Accounts Receivable $ 24,000 Engineering Fees Earned (Being Fees Earned on account) $ 24,000 j Equipment rental Expenses $ 1,530 Accounts Payable $ 1,530 (Being Rental Expense on equipment incurred) k Cash $ 6,000 Accounts Receivable (Being payment received on account) $ 6,000 1 $ 1,700 Wages Expense Cash (Being Wages Paid) $ 1,700 m Accounts Payable $ 1,550 Cash (Being payment made on account) $ 1,550 n Repair Expense $ 1,155 Cash (Being minor repair expense incurred) $ 1,155 0 Jenna Aracel, Withdrawal $ 9,300 Cash (Being Cash withdrawl for personal use) $ 9.300 p $ 1,100 Wages Expense Cash (Being Wages Paid) $ 1,100 q Advertising Expense $ 2,800 Cash (Being Advertising Expense paid) $ 2,800

2. Ledgers -

a b Cash $ 230,000 $ 9,000 $ 6,000 Notes Payable (Long Term) b $ 48,000 f $ 11,800 e k с d f cl Bal $ 59,800 1 $ 7,000 $ 58,000 $ 3,200 $ 11,200 $ 1,700 $ 1,550 $ 1,155 $ 9,300 $ 1,100 $ 2,800 m o Jenna Aracel, Capital a $310,200 р g cl Bal $310,200 cl Bal $ 147,995 $245,000 $245,000 Prepaid Insurance $ 3,200 Jenna Aracel, Withdrawal $ 9,300 d o cl Bal $ 3,200 cl Bal $ 9,300 Accounts Receivable $ 18,000 k $ 24,000 $ 6,000 i Engineering Fees Earned $ 9,000 g $ 18,000 i $ 24,000 $ 51,000 cl Bal $ 36,000 $ 42,000 $ 42,000 $ 51,000 Land $ 55,000 Equipment rental Expenses $ 1,530 b j cl Bal $ 1,530 cl Bal $ 55,000 Building $ 58,000 с I р Wages Expense $ $ 1.700 $ 1,100 cl Bal cl Bal $ 58,000 $ 2,800 Office Equipments $ 9,200 $ 1,550 Repair Expense $ 1,155 a h n cl Bal $ 10,750 cl Bal $ 1,155 Drafting Equipments $ 71,000 $ 23,000 Advertising Expense $ 2,800 a f q cl Bal $ 94,000 cl Bal $ 2,800 m Accounts Payable $ 1,550 h j $ 1,550 $ 1,530 Cl Bal $ 1,530

3. Trial Balance -

Credit Aracel Engineering Trial Balance June 30 Accounts Title Debit Cash $147,995 Prepaid Insurance $ 3,200 Accounts Receivable $ 36,000 Land $ 55,000 Building $ 58,000 Office Equipments $ 10,750 Drafting Equipments $ 94,000 Accounts Payable Notes Payable (Long Term) Jenna Aracel, Capital Jenna Aracel, Withdrawal $ 9,300 Engineering Fees Earned Equipment rental Expenses $ 1,530 Wages Expense $ 2,800 Repair Expense $ 1,155 Advertising Expense $ 2,800 $ 1,530 $ 59,800 $310,200 $ 51,000 Total $ 422,530 $ 422,530