Question

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

a.Jenna Aracel, the owner, invested $170,000 cash, office equipment with a

value of $7,600, and $73,000 of drafting equipment to launch the company

in exchange for common stock.

b.The company purchased land worth $60,000 for an office by paying $6,400

cash and signing a long-term note payable for $53,600.

c.The company purchased a portable building with $58,000 cash and moved it

onto the land acquired in b.

d.The company paid $3,300 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 $7,700 cash.

f.The company purchased $22,000 of additional drafting equipment by paying

$10,700 cash and signing a long-term note payable for $11,300.

g.The company completed $18,500 of engineering services for a client. This

amount is to be received in 30 days.

h.The company purchased $1,050 of additional office equipment on credit.

i.The company completed engineering services for $26,000 on credit.

j.The company received a bill for rent of equipment that was used on a

recently completed job. The $1,501 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 $2,200 cash for wages to a drafting assistant.

m.The company paid $1,050 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.The company paid $9,560 cash in dividends.

p.The company paid $2,200 cash for wages to a drafting assistant.

q.The company paid $4,100 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

Journal Entries
				in $
Sl	Account head	Code	Entry	Debit	Credit
a	cash	101	cash	170000
	common stock	307	common stock		170000
	office equipment	163	office equipment	7600
	cash	101	cash		7600
	drafting equipment	164	drafting equipment	73000
	cash	101	cash		73000
b	land	172	land	60000
	cash	101	cash		6400
	notes payable	250	notes payable		53600
c	building	170	building	58000
	cash	101	cash		58000
d	insurance	exp	insurance	2200
	prepaid insurance	108	prepaid insurance		1100
	cash	101	cash		3300
e	cash	101	cash	7700
	engineering fee earned	402	engineering fee earned		7700
f	drafting equipment	164	drafting equipment	22000
	cash	101	cash		10700
	notes payable	250	notes payable		11300
g	accounts receivable	106	accounts receivable	18500
	engineering fee earned	402	engineering fee earned		18500
h	office equipment	163	office equipment	1050
	accounts payable	201	accounts payable		1050
i	accounts receivable	106	accounts receivable	26000
	engineering fee earned	402	engineering fee earned		26000
j	equipment rental expense	602	equipment rental expense	1501
	accounts payable	201	accounts payable		1501
k	cash	101	cash	8000
	accounts receivable	106	accounts receivable		8000
l	wages expenses	601	wages expenses	2200
	cash	101	cash		2200
m	accounts payable	201	accounts payable	1050
	cash	101	cash		1050
n	repairs expense	604	repairs expense	1155
	cash	101	cash		1155
o	dividends	319	dividends	9560
	cash	101	cash		9560
p	wages expenses	601	wages expenses	2200
	cash	101	cash		2200
q	advertising expense	603	advertising expense	4100
	cash	101	cash		4100

Trial Balance
		In $
Account Head	Code	Debit	Credit
cash	101	6,435
accounts receivable	106	36,500
prepaid insurance	108	1,100
office equipment	163	8,650
drafting equipment	164	95,000
building	170	58,000
land	172	60,000
accounts payable	201		1,501
notes payable	250		64,900
common stock	307		170,000
dividends	319	9,560
engineering fee earned	402		52,200
wages expenses	601	4,400
equipment rental expense	602	1,501
advertising expense	603	4,100
repairs expense	604	3,355
Total		288,601	288,601