Question

Problem 2-2A Preparing and posting journal entries; preparing a trial balance LO C3, C4, A1, P1, P2

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

a. Jenna Aracel, the owner, invested $ 100,000 cash, office equipment with a value of $ 5,000, and $ 60,000 of drafting equipment to launch the company in exchange for common stock.

b. The company purchased land worth $ 49,000 for an office by paying $ 6,300 cash and signing a long-term note payable for $ 42,700

c. The company purchased a portable building with $ 55,000 cash and moved it onto the land acquired in b.

d. The company paid $ 3,000 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 $ 6,200 cash.

f. The company purchased $ 20,000 of additional drafting equipment by paying $ 9,500 cash and signing a long-term note payable for $ 10,500

9. The company Weekly completed $ 14,000 of engineering services for a client. This amount is to be received in 30 days.

h. The company purchased $ 1,150 of additional office equipment on credit.

1. The company completed engineering services for $ 22.000 on credit.

J. The company received a bill for rent of equipment that was used on a recently completed job. The $ 1,333 rent cost must be paid within 30 days.

k. The company collected $ 7,000 cash in partial payment from the client described in transaction g .

I. The company paid $ 1,200 cash for wages to a drafting assistant.

m. The company paid $ 1,150 cash to settle the account payable created in transaction h.

n. The company paid $ 925 cash for minor maintenance of its drafting equipment.

o. The company paid $ 9,480 cash in dividends.

p. The company paid $ 1,200 cash for wages to a drafting assistant.

q. The company paid $ 2,500 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

answer to part a

	In the books of Aracel Engineering
Date	Particulars	dr/ cr	amount (in dollars)	amount (in dollars)
a	cash (101)	dr	100000
	Office Equipment (163)	dr	5000
	Drafting Equipment (164)	dr	60000
	To common Stock (307)	cr		165000
	(Being jeena aracel invest & started the business)
b	land (172)	dr	49000
	to cash (101)	cr		6300
	to notes payable (250)	cr		42700
	(being land purchased)
c	building (170)	dr	55000
	to cash (101)	cr		55000
	(being building purchased & moved to land)
d	prepaid insurance (108)	dr	3000
	to cash (101)	cr		3000
	(assuming prepaid insurance paid for future )
e	cash (101)	dr	6200
	to engineering fees (402)	cr		6200
	(assuming the income as engineering income)
f	Drafting Equipment (164)	dr	20000
	to cash (101)	cr		9500
	to notes payable (250)	cr		10500
	(being drafinting equipment purchased for cash (101) & notes payable)
g	Accounts recievable (106)	dr	14000
	to engineering fees (402)	cr		14000
	(being engineering fees earned)
h	Office Equipment (163)	dr	1150
	to Accounts payable (201)	cr		1150
	(being purchased on credit)
i	Accounts recievable (106)	dr	22000
	to engineering fees (402)	cr		22000
	(being engineering fees earned on credit. Since the services is provided during this period therefore it is accrued on the same period )
j	equipment rental expense (602)	dr	1333
	to Accounts payable (201)			1333
	(being rental expenses)
k	cash (101)	dr	7000
	to Accounts recievable (106)	cr		7000
l	wages expenses (601)	dr	1200
	to cash (101)	cr		1200
m	Accounts payable (201)	dr	1150
	to cash (101)	cr		1150
n	repair expenses (604)	dr	925
	to cash (101)	cr		925
o	dividends (319)	dr	9480
	to cash (101)	cr		9480
p	wages expenses (601)	dr	1200
	to cash (101)	cr		1200
q	advertisement expense (603)	dr	2500
	to cash (101)	cr		2500

answer to part b (ledger in the books of Aracel Engineering) (all amounts is in dollar figures)

answer to part c