Chapter 2, Problem 2APSA

To determine

Concept Introduction

Journal Entry: The journal entries are accounting entries made in a chronological order in the general ledger to record business transactions. Journal entries are logged with the debit amounts and credit amounts with their respective dates and account names.

T Account: A T-account is the graphical representation of a general ledger that records business transactions. A T-Account looks like the letter T, where the debit entries are recorded at the left side, the credit entries are recorded on the right side and the account title is at the top.

Trial Balance: The Trial Balance is a list of closing balance of all ledger accounts on a particular date. It is a summary of all T-Account balances in the ledger and the total of debit and credit balances should always match.

1.

To Prepare: The journal entries for the transactions given for Aracel Engineering.

Explanation of Solution

The journal entries for the transactions given are prepared as below for Aracel Engineering.

Date	Account	Debit ($)	Credit (S)
a	Cash	100,000
	Office Equipment	5,000
	Drafting Equipment	60,000
	J. Arcel, Capital		165,000
b	Land	49,000
	Cash		6,300
	Note Payable		42,700
c	Building	55,000
	Cash		55,000
d	Prepaid Insurance	3,000
	Cash		3,000
e	Cash	4,000
	Engineering Fee Earned		4,000
f	Drafting Equipment	20,000
	Cash		5,900
	Note Payable		10,500
g	Account Receivable	14,000
	Engineering Fee Earned		14,000
h	Office Equipment	1,150
	Account Payable		1,150
i	Account Receivable	22,000
	Engineering Fee Earned		22,000
j	Equipment Rental Expenses	1,333
	Account Payable		1,333
k	Cash	7,000
	Account receivable		7,000
l	Wages Expenses	1,200
	Cash		1,200
m	Account Payable	1,150
	Cash		1,150
n	Repairs Expenses	925
	Cash		925
o	J. Arcel, Withdrawals	9,480
	Cash		9,480
p	Wages Expenses	1,200
	Cash		1,200
q	Advertising Expenses	2,500
	Cash		2,500

2.

To determine

To Prepare: The T-accounts for the transactions given for Aracel Engineering.

Explanation of Solution

T-accounts prepared as below for Aracel Engineering.

Cash Account (101)
Debit	Amount ($)	Credit	Amount ($)
J. Arcel, Capital	100,000	Land	6,300
Engineering Fee Earned	6,200	Building	55,000
Account receivable	7,000	Prepaid Insurance	3,000
		Drafting Equipment	9,500
		Wages Expenses	1,200
		Account Payable	1,150
		Repairs Expenses	925
		J. Arcel, Withdrawals	9,480
		Wages Expenses	1,200
		Advertising Expenses	2,500
Closing Balance	22,945

Account receivable Account (106)
Debit	Amount ($)	Credit	Amount ($)
Engineering Fee Earned	14,000	Cash	7,000
Engineering Fee Earned	22,000
Closing Balance	29,000

Prepaid Insurance Account (108)
Debit	Amount ($)	Credit	Amount ($)
Cash	3,000
Closing Balance	3,000

Office Equipment Account (164)
Debit	Amount ($)	Credit	Amount ($)
J. Arcel, Capital	5,000
Account Payable	1,150
Closing Balance	6,150

Drafting Equipment Account (163)
Debit	Amount ($)	Credit	Amount ($)
J. Arcel, Capital	60,000
Cash	9,500
Note Payable	10,500
Closing Balance	80,000

Building Account (163)
Debit	Amount ($)	Credit	Amount ($)
Cash	55,000
Closing Balance	55,000

Land Account (163)
Debit	Amount ($)	Credit	Amount ($)
Cash	6,300
Note Payable	42,700
Closing Balance	49,000

Account Payable Account (201)
Debit	Amount ($)	Credit	Amount ($)
Cash	1,150	Office Equipment	1,150
		Equipment Rental Expenses	1,333
		Closing Balance	1,333

Notes Payable Account (250)
Debit	Amount ($)	Credit	Amount ($)
Cash	11,600	Land	42,700
		Drafting Equipment	10,500
		Closing Balance	53,200

J. Arcel, Capital Account (301)
Debit	Amount ($)	Credit	Amount ($)
		Cash	100,000
		Office Equipment	5,000
		Drafting Equipment	60,000
		Closing Balance	165,000

J. Arcel, Withdrawals Account (302)
Debit	Amount ($)	Credit	Amount ($)
Cash	9,480
Closing Balance	9,480

Engineering Fee Earned Account (402)
Debit	Amount ($)	Credit	Amount ($)
		Cash	6,200
		Account receivable	14,000
		Account receivable	22,000
		Closing Balance	42,200

Wages Expenses Account (601)
Debit	Amount ($)	Credit	Amount ($)
Cash	1,200
Cash	1,200
Closing Balance	2,400

Equipment Rental Expenses Account (602)
Debit	Amount ($)	Credit	Amount ($)
Account Payable	1,333
Closing Balance	1,333

Advertising Expenses Account (603)
Debit	Amount ($)	Credit	Amount ($)
Cash	2,500
Closing Balance	2,500

Repair Expenses Account (604)
Debit	Amount ($)	Credit	Amount ($)
Cash	925
Closing Balance	925

3.

To determine

To Prepare: The trial balance for the transactions given for Aracel Engineering as of April 30.

Explanation of Solution

The trail balance prepared as below for Aracel Engineering.

Aracel Engineering
Trail balance as on June 30
Account	Debit ($)	Credit ($)
Cash	22,945
Account receivable	29,000
Prepaid Insurance	3,000
Office Equipment	6,150
Drafting Equipment	80,000
Building	55,000
Land	49,000
Account Payable		1,333
Notes Payable		53,200
J. Arcel, Capital		165,000
J. Arcel, Withdrawals	9,480
Engineering Fee Earned		42,200
Wages Expenses	2,400
Equipment Rental Expenses	1,333
Adverting Expenses	2,500
Repair Expenses	925
Total	261,733	261,733