Question

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

a.Jenna Aracel, the owner, invested $190,000 cash, office equipment with a value of $8,000, and $66,000 of drafting equipment to launch the company in exchange for common stock.

b.The company purchased land worth $54,000 for an office by paying $7,000 cash and signing a long-term note payable for $47,000.

c.The company purchased a portable building with $59,000 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 $28,000 of additional drafting equipment by paying $11,200 cash and signing a long-term note payable for $16,800.

g.The company completed $14,500 of engineering services for a client. This amount is to be received in 30 days.

h.The company purchased $1,100 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 $1,468 rent cost must be paid within 30 days.

k.The company collected $8,000 cash in partial payment from the client described in transaction g.

L.The company paid $2,000 cash for wages to a drafting assistant.

m.The company paid $1,100 cash to settle the account payable created in transaction h.

n.The company paid $1,110 cash for minor maintenance of its drafting equipment.

o.The company paid $10,160 cash in dividends.

p.The company paid $1,500 cash for wages to a drafting assistant.

q.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); 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

	Part 1				Account No.
	a.		Cash		101	190,000
			Office Equipment		163	8,000
			Drafting Equipment		164	66,000
				J. Aracel, Capital	301		264,000
			Owner invested cash and equipment.
	b.		Land		172	54,000
				Cash	101		7,000
				Note Payable	250		47,000
			Purchased land with cash and note payable.
	c.		Building		170	59,000
				Cash	101		59,000
			Purchased building.
	d.		Prepaid Insurance		108	3,200
				Cash	101		3,200
			Purchased 18-month insurance policy.
	e.		Cash		101	9,000
				Engineering Fees Earned	402		9,000
			Collected cash for completed work.
	f.		Drafting Equipment		164	28,000
				Cash	101		11,200
				Note Payable	250		16,800
			Purchased equipment with cash and note payable.
	g.		Accounts Receivable		106	14,500
				Engineering Fees Earned	402		14,500
			Completed services for client.
	h.		Office Equipment		163	1,100
				Accounts Payable	201		1,100
			Purchased equipment on credit.
	i.		Accounts Receivable		106	24,000
				Engineering Fees Earned	402		24,000
			Billed client for completed work.
	j.		Equipment Rental Expense		602	1,468
				Accounts Payable	201		1,468
			Incurred equipment rental expense.
	k.		Cash		101	8,000
				Accounts Receivable	106		8,000
			Collected cash on account.
	l.		Wages Expense		601	2,000
				Cash	101		2,000
			Paid assistant’s wages.
	m.		Accounts Payable		201	1,100
				Cash	101		1,100
				Paid amount due on account.
	n.		Repairs Expense		604	1110
				Cash	101		1110
				Paid for repair of equipment.
	o.		J. Aracel, Withdrawals		302	10,160
				Cash	101		10,160
			Owner withdrew cash for personal use.
	p.		Wages Expense		601	1,500
				Cash	101		1,500
			Paid assistant’s wages.
	q.		Advertising Expense		603	2,800
				Cash	101		2,800
			Paid for advertising expense.
	Part 2
	Cash No. 101						Accounts Payable No. 201
	Date	PR	Debit	Credit	Balance		Date	PR	Debit	Credit	Balance
	(a)		190,000		190,000		(h)			1,100	1,100
	(b)			7,000	183,000		(j)			1,468	2,568
	(c)			59,000	124,000		(m)		1,100		1,468
	(d)			3,200	120,800
	(e)		9,000		129,800		Notes Payable No. 250
	(f)			11,200	118,600		Date	PR	Debit	Credit	Balance
	(k)		8,000		126,600		(b)			47,000	47,000
	(l)			2,000	124,600		(f)			16,800	63,800
	(m)			1,100	123,500
	(n)			1,110	122,390
	(o)			10,160	112,230		J. Aracel, Capital No. 301
	(p)			1,500	110,730		Date	PR	Debit	Credit	Balance
	(q)			2,800	107,930		(a)			264,000	264,000
	Accounts Receivable No. 106						J. Aracel, Withdrawals No. 302
	Date	PR	Debit	Credit	Balance		Date	PR	Debit	Credit	Balance
	(g)		14,500		14,500		(o)		10,160		10,160
	(i)		24,000		38,500
	(k)			8,000	30,500		Engineering Fees Earned No. 402
							Date	PR	Debit	Credit	Balance
	Prepaid Insurance No. 108						(e)			9,000	9,000
	Date	PR	Debit	Credit	Balance		(g)			14,500	23,500
	(d)		3,200		3,200		(i)			24,000	47,500
	Office Equipment No. 163						Wages Expense No. 601
	Date	PR	Debit	Credit	Balance		Date	PR	Debit	Credit	Balance
	(a)		8,000		8,000		(l)		2,000		2,000
	(h)		1,100		9,100		(p)		1,500		3,500
	Drafting Equipment No. 164						Equipment Rental Expense No. 602
	Date	PR	Debit	Credit	Balance		Date	PR	Debit	Credit	Balance
	(a)		66,000		66,000		(j)		1,468		1,468
	(f)		28,000		94,000
	Building No. 170						Advertising Expense No. 603
	Date	PR	Debit	Credit	Balance		Date	PR	Debit	Credit	Balance
	(c)		59,000		59,000		(q)		2,800		2,800
	Land No. 172						Repairs Expense No. 604
	Date	PR	Debit	Credit	Balance		Date	PR	Debit	Credit	Balance
	(b)		54,000		54,000		(n)		1110		1110
	Part 3
				Aracel Engineering
				Trial Balance
				Jun-30
					Debit	Credit
	Cash				$ 107,930.00
	Accounts receivable				$   30,500.00
	Prepaid insurance				$     3,200.00
	Office equipment				$     9,100.00
	Drafting equipment				$   94,000.00
	Building				$   59,000.00
	Land				$   54,000.00
	Accounts payable					$     1,468.00
	Notes payable					$   63,800.00
	J. Aracel, Capital					$ 264,000.00
	J. Aracel, Withdrawals				$   10,160.00
	Engineering fees earned					$   47,500.00
	Wages expense				$     3,500.00
	Equipment rental expense				$     1,468.00
	Advertising expense				$     2,800.00
	Repairs expense				$     1,110.00
	Totals				$ 376,768.00	$ 376,768.00