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Financial & Managerial Accounting
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Short Answer

Question: 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 longterm 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.

g. The company 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.

i. 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.

l. 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

2. Open the following ledger accounts—their account numbers are in parentheses (use the balance column format): 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). Post the journal entries from part 1 to the accounts and enter the balance after each posting.

The total cash ledger balance amounts to $22,945.

See the step by step solution

Step by Step Solution

Step 1: General Ledger (part 1)

Cash Account No. 101

Date

PR

Debit

Credit

Balance

a

G1

$ 100,000

$ 100,000

b

G1

$ 6,300

93,700

c

G1

55,000

38,700

d

G1

3,000

35,700

e

G1

6,200

41,900

f

G1

9,500

32,400

k

G2

7,000

39,400

l

G2

1,200

38,200

m

G2

1,150

37,050

n

G2

925

36,125

o

G2

9,480

26,645

P

G3

1,200

25,445

q

G3

2,500

22,945

Accounts Receivables Account No. 106

Date

PR

Debit

Credit

Balance

g

G2

$ 14,000

$ 14,000

i

G2

22,000

36,000

k

G2

7,000

29,000

Prepaid Insurance Account No. 108

Date

PR

Debit

Credit

Balance

d

G1

$ 3,000

$ 3,000

Step 2: General Ledger (part 2)

Office Equipment Account No. 163

Date

PR

Debit

Credit

Balance

a

G1

$ 5,000

$ 5,000

h

G1

1,150

6,150

Drafting Equipment Account No. 164

Date

PR

Debit

Credit

Balance

a

G1

$ 60,000

$ 60,000

f

G1

20,000

80,000

Building Account No. 170

Date

PR

Debit

Credit

Balance

c

G1

$ 55,000

$ 55,000

Land Account No. 172

Date

PR

Debit

Credit

Balance

c

G1

$ 49,000

$ 49,000

Accounts Payable Account No. 201

Date

PR

Debit

Credit

Balance

h

G2

$ 1,150

$ 1,150

j

G2

1,333

2,483

m

G2

$ 1,150

1,333

Notes Payable Account No. 250

Date

PR

Debit

Credit

Balance

b

G1

$ 42,700

$ 42,700

f

G1

10,500

53,200

Step 3: General Ledger (part 3)

Common Stock Account No. 307

Date

PR

Debit

Credit

Balance

a

G1

$ 165,000

$ 165,000

Dividends Account No. 319

Date

PR

Debit

Credit

Balance

o

G2

$ 9,480

$ 9,480

Engineering Fees Earned Account No. 402

Date

PR

Debit

Credit

Balance

e

G1

$ 6,200

$ 6,200

g

G1

14,000

20,200

I

G2

22,000

42,200

Wages Expenses Account No. 601

Date

PR

Debit

Credit

Balance

l

G2

$ 1,200

$ 1,200

p

G3

1,200

2,400

Equipment Rental Expense Account No. 602

Date

PR

Debit

Credit

Balance

j

G2

$ 1,333

$ 1,333

Advertising Expense Account No. 603

Date

PR

Debit

Credit

Balance

q

G3

$ 2,500

$ 2,500

Step 4: General Ledger (part 4)

Repair Expense Account No. 604

Date

PR

Debit

Credit

Balance

n

G2

$ 925

$ 925

Most popular questions for Business-studies Textbooks

Question: Karla Tanner opened a web consulting business called Linkworks and completed the following transactions in its first month of operations.

Apr. 1 Tanner invested $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock.

2 The company prepaid $9,000 cash for 12 months’ rent for office space. (Hint: Debit Prepaid Rent for $9,000.)

3 The company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. Payment is due within 10 days.

6 The company completed services for a client and immediately received $4,000 cash.

9 The company completed a $6,000 project for a client, who must pay within 30 days.

13 The company paid $11,600 cash to settle the account payable created on April 3.

19 The company paid $2,400 cash for the premium on a 12-month insurance policy. (Hint: Debit Prepaid Insurance for $2,400.)

22 The company received $4,400 cash as partial payment for the work completed on April 9.

25 The company completed work for another client for $2,890 on credit.

28 The company paid $5,500 cash in dividends.

29 The company purchased $600 of additional office supplies on credit.

30 The company paid $435 cash for this month’s utility bill.

Required

2. Open the following ledger accounts—their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); Common Stock (307); Dividends (319); Services Revenue (403); and Utilities Expense (690). Post journal entries from part 1 to the ledger accounts and enter the balance after each posting.

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