Question & Answer: Jenna Aracel opened a business called Aracel Engineering and recorded the following transactions in its first month of operations Jun. 1…..

For the journal entry I don’t believe I did it right, can you correct it?

Jenna Aracel opened a business called Aracel Engineering and recorded the following transactions in its first month of operations Jun. 1Jenna Aracel, the owner, invested $100,000 cash, office equipment with a value of $5,000, and $60,000 of drafting equipment Jun. 2 The company purchased land worth $49,000 for an office by paying $6,300 cash and signing a long-term note payable for to launch the company in exchange for common stock. $42,700 Jun. 2 The company purchased a portable building with $55,000 cash and moved it onto the land acquired on June 2. Jun. 2 The company paid $3,000 cash for the premium on a 18-month insurance policy Jun. 7 The company completed and delivered a set of plans for a client and collected $6,200 cash Jun. 12 The company purchased $20,000 of additional drafting equipment by paying $9,500 cash and signing a long-term note payable for $10,500 Jun. 14 The company completed $14,000 of engineering services for a client. This amount is to be received in 30 days Jun. 15 The company purchased $1,150 of additional office equipment on credit. Jun. 17 The company completed engineering services for $22,000 on credit. Jun. 18 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 Jun. 20 The company collected $7,000 cash in partial payment from the client billed on June 14 Jun. 21 The company paid $1,200 cash for wages to a drafting assistant Jun. 23 The company paid $1,150 cash to settle the account payable created on June 15 Jun. 24 The company paid $925 cash for minor maintenance of its drafting equipment. Jun. 26 The company paid $9,480 cash in dividends Jun. 28 The company paid $1,200 cash for wages to a drafting assistant. Jun. 30 The company paid $2,500 cash for advertisements on the web during June. Descriptions of items that require adjusting entries on June 30, 2017, follow. a) The company has completed, but not yet billed, $6,000 of engineering services for a client. b) Straight-line depreciation on the office equipment, assuming a 5-year life and a $150 salvage value, is $100 per month c) Straight-line depreciation on the drafting equipment, assuming a 5-year life and a $2,000 salvage value, is $1,300 per month d) Straight-line depreciation on the building, assuming a 25-year life and a $1,000 salvage value, is $180 per month e) The balance in prepaid insurance represents a 15-month policy that went into effect on June 1 f) Accrued interest on the long-term note payable is $75 g) The drafting assistant is paid $1,200 for a 5-day work week. 2 days wages have been incurred but are unpaid as of month-end

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Jenna Aracel opened a business called Aracel Engineering and recorded the following transactions in its first month of operations Jun. 1Jenna Aracel, the owner, invested $100,000 cash, office equipment with a value of $5,000, and $60,000 of drafting equipment Jun. 2 The company purchased land worth $49,000 for an office by paying $6,300 cash and signing a long-term note payable for to launch the company in exchange for common stock. $42,700 Jun. 2 The company purchased a portable building with $55,000 cash and moved it onto the land acquired on June 2. Jun. 2 The company paid $3,000 cash for the premium on a 18-month insurance policy Jun. 7 The company completed and delivered a set of plans for a client and collected $6,200 cash Jun. 12 The company purchased $20,000 of additional drafting equipment by paying $9,500 cash and signing a long-term note payable for $10,500 Jun. 14 The company completed $14,000 of engineering services for a client. This amount is to be received in 30 days Jun. 15 The company purchased $1,150 of additional office equipment on credit. Jun. 17 The company completed engineering services for $22,000 on credit. Jun. 18 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 Jun. 20 The company collected $7,000 cash in partial payment from the client billed on June 14 Jun. 21 The company paid $1,200 cash for wages to a drafting assistant Jun. 23 The company paid $1,150 cash to settle the account payable created on June 15 Jun. 24 The company paid $925 cash for minor maintenance of its drafting equipment. Jun. 26 The company paid $9,480 cash in dividends Jun. 28 The company paid $1,200 cash for wages to a drafting assistant. Jun. 30 The company paid $2,500 cash for advertisements on the web during June. Descriptions of items that require adjusting entries on June 30, 2017, follow. a) The company has completed, but not yet billed, $6,000 of engineering services for a client. b) Straight-line depreciation on the office equipment, assuming a 5-year life and a $150 salvage value, is $100 per month c) Straight-line depreciation on the drafting equipment, assuming a 5-year life and a $2,000 salvage value, is $1,300 per month d) Straight-line depreciation on the building, assuming a 25-year life and a $1,000 salvage value, is $180 per month e) The balance in prepaid insurance represents a 15-month policy that went into effect on June 1 f) Accrued interest on the long-term note payable is $75 g) The drafting assistant is paid $1,200 for a 5-day work week. 2 days’ wages have been incurred but are unpaid as of month-end

Expert Answer

 

Date Account title Debit Credit
Jun 1 Cash. 100,000
Office Equipment 5,000
Drafting Equipment 60,000
Common Stock 165,000
Owner invested cash and equipment.
Jun 2 Land 49,000
Cash 6,300
Note Payable 42,700
Purchased land with cash and note payable.
Jun 2 Building 55,000
Cash 55,000
Purchased building.
Jun 2 Prepaid Insurance 3,000
Cash 3,000
Purchased 15-month insurance policy
Jun 7 Cash 6,200
Engineering Fees Earned 6,200
Collected cash for completed work
Jun 12 Drafting Equipment 20,000
Cash 9,500
Note Payable 10,500
Purchased equipment with cash and note payable
Jun 14 Accounts Receivable 14,000
Engineering Fees Earned 14,000
Completed services for client
Jun 15 Office Equipment 1,150
Accounts Payable 1,150
Purchased equipment on credit
Jun 17 Accounts Receivable 22,000
Engineering Fees Earned 22,000
Billed client for completed work
Jun 18 Equipment Rental Expense 1,333
Accounts Payable 1,333
Incurred equipment rental expense
Jun20 Cash 7,000
Accounts Receivable 7,000
Collected cash on account
Jun 21 Wages Expense 1,200
Cash 1,200
Jun23 Accounts Payable 1,150
Cash 1,150
Paid amount due on account
Jun 24 Repairs Expense 925
Cash 925
Paid for repair of equipment
Jun 26 Dividends 9,480
Cash 9,480
Paid cash for dividends
Jun 28 Wages Expense 1,200
Cash 1,200
Jun 30 Advertising   Expense 2,500
Cash 2,500
Paid for advertising expense
Adjusting Entries
Date Account title Debit Credit
a. Accounts Receivable 6,000
Engineering Fees Earned 6,000
b. Depreciation Expense 100
Accumulated Depreciation-Office equipment 100
c. Depreciation Expense 1,300
Accumulated Depreciation-Drafting equipment 1,300
d. Depreciation Expense 1,300
Accumulated Depreciation-Building 1,300
e. Insurance Expense(3000/15) 200
Prepaid Insurance 200
f. Interest expense 75
Interest payable 75
g. Wages expense 240
Wages payable 240

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