Question

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

1. Prepare general journal entries to record these transactions (use the account titles listed in part 2).

Short answer

The total of general journal matches at $360,138.

Step-by-step solution

Journal Entry (part 1)

General Journal
Page 1
Date	Description	PR	Debit	Credit
a	Cash	101	$ 100,000
	Office Equipment	163	5,000
	Drafting Equipment	164	60,000
	Common Stock	307		$ 165,000
	Being investment made into the business in the form of cash and equipment
b	Land	172	49,000
	Cash	101		6,300
	Notes Payable	250		42,700
	Being land purchased against cash and notes payable
c	Building	170	55,000
	Cash	101		55,000
	Being building purchased for cash
d	Prepaid Insurance	108	3,000
	Cash	101		3,000
	Being insurance premium purchased for 18 months
e	Cash	101	6,200
	Engineering Fees Earned	402		6,200
	Being services provided and payment received
f	Drafting Equipment	164	20,000
	Cash	101		9,500
	Notes Payable	250		10,500
	Being drafting equipment purchased against cash and notes payable
	Carried Forward		$ 298,200	$ 298,200

Journal Entry (part 2)

General Journal
Page 2
Date	Description	PR	Debit	Credit
	Brought Forward		$ 298,200	$ 298,200
g	Accounts Receivables	106	14,000
	Engineering Fees Earned	402		14,000
	Being Services provided and amount due
h	Office Equipment	163	1,150
	Accounts Payable	201		1,150
	Being equipment purchased on credit
i	Accounts Receivables	106	22,000
	Engineering Fees Earned	402		22,000
	Being services provided on credit
j	Equipment Rental Expense	602	1,333
	Accounts Payable	201		1,333
	Being due to be paid
k	Cash	101	7,000
	Accounts Receivables	106		7,000
	Being amount collected from the client
l	Wages Expense	601	1,200
	Cash	101		1,200
	Being wages expenses paid
m	Accounts Payable	201	1,150
	Cash	101		1,150
	Being account settled for equipment purchased
n	Repair Expense	604	925
	Cash	101		925
o	Dividends	319	9,480
	Cash	101		9,480
	Being dividend paid
	Carried Forward		$ 356,438	$ 356,438

 Step 3: Journal Entry (part 3)

General Journal
Page 3
Date	Description	PR	Debit	Credit
	Brought Forward		$ 356,438	$ 356,438
p	Wages Expense	601	1,200
	Cash	101		1,200
	Being wages expense paid
q	Advertising Expense	603	2,500
	Cash	101		2,500
	Being advertisement expenses paid
	Total		$ 360,138	$ 360,138