Chapter 2, Problem 2PSA

1.

Summary Introduction

Introduction: Journal means recording the transactions made during the course of business in a chronological manner. Whereas journal entry means recording the transaction in a journal or by maintaining a book of accounts for future verification and taking other measures. Trial balance refers to a listing of all the accounts and later on matching with the other accounts so that complete verification is done.

To calculate: Journal entries, trial balance and general ledgers of the accounts.

Answer to Problem 2PSA

All the journal entries required are maintained and the ledger of the accounts is maintained with trial balance.

Explanation of Solution

Sr. No.	Particulars	PR	Amount	Amount
a.	Cash	101	$\$100,000$
	Office equipment	163	$\$5,000$
	Drafting Equipment	164	$\$60,000$
	Common stock	307		$\$165,000$
	(Being owner Invested cash and equipment)
b.	Land	172	$\$49,000$
	Cash	101		$\$6,300$
	Note payable	250		$\$42,700$
	(Being land purchased with cash and note payable)
c.	Building	170	$\$55,000$
	Cash	101		$\$55,000$
	(Being building purchased)
d.	Prepaid Insurance	108	$\$3,000$
	Cash	101		$\$3,000$
	(Being insurance policy for 18 month purchased)
e.	Cash	101	$\$6,200$
	Engineering fees earned	402		$\$6,200$
	(Being cash collected after completion of work)
f.	Drafting equipment	164	$\$20,000$
	Cash	101		$\$9,500$
	Note Payable	250		$\$10,500$
	(Being equipment purchased for cash and notes payable)
g.	Accounts receivable	106	$\$14,000$
	Engineering fees earned	402		$\$14,000$
	(Being client services completed)
h.	Office equipment	163	$\$1,150$
	Account payable	201		$\$1,150$
	(Being Equipment purchased on credit)
i.	Account Receivable	106	$\$22,000$
	Engineering fees earned	402		$\$22,000$
	(Being Client billed for completed work)
j.	Equipment Rental expense	602	$\$1,333$
	Accounts payable	201		$\$1,333$
	(Being rental expense incurred on equipment)
k.	Cash	101	$\$7,000$
	Accounts receivable	106		$\$7,000$
	(Being cash collected on account)
l.	Wages expenses	601	$\$1,200$
	Cash	101		$\$1,200$
	(Being wages paid to assistant)
m.	Accounts payable	201	$\$1,150$
	Cash	101		$\$1,150$
	(Being amount due on account)
n.	Repairs Expenses	604	$\$925$
	Cash	101		$\$925$
	(Being expense paid for repair of equipment)
o.	Dividends	319	$\$9,480$
	Cash	101		$\$9,480$
	(being cash drawn for personal use)
p.	Wages expenses	601	$\$1,200$
	Cash	101		$\$1,200$
	(Being wages paid to assistant)
q.	Advertising Expenses	603	$\$2,500$
	Cash	101		$\$2,500$
	(Being Advertising expenses paid)

Summary Introduction

Introduction: Journal means recording the transactions made during the course of business in a chronological manner. Whereas journal entry means recording the transaction in a journal or by maintaining a book of accounts for future verification and taking other measures. Trial balance refers to a listing of all the accounts and later on matching with the other accounts so that complete verification is done.

To calculate: Journal entries, trial balance and general ledgers of the accounts.

Answer to Problem 2PSA

All the journal entries required are maintained and the ledger of the accounts is maintained with trial balance.

Explanation of Solution

Cash Ledger- A/c No. 101

Sr. No.	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.	G1	$7,000		$39,400
l.	G1		$1,200	$38,200
m.	G1		$1,150	$37,050
n.	G1		$925	$36,125
o.	G1		$9,480	$26,645
p.	G1		$1,200	$25,445
q.	G1		$2,500	$22,945

Account Receivable -A/c. No. 106

Sr. No.	PR	Debit	Credit	Balance
g.	G1	$14,000		$14,000
i.	G1	$22,000		$36,000
k.	G1		$7,000	$29,000

Prepaid Insurance- A/c. No. 108

Sr. No.	PR	Debit	Credit	Balance
d.	G1	$3,000		$3,000

Office Equipment- A/c No. 163

Sr. No.	PR	Debit	Credit	Balance
a.	G1	$5,000		$5,000
h.	G1	$1,150		$6,150

Drafting Equipment − A/C No. 164

Sr. No.	PR	Debit	Credit	Balance
a.	G1	$60,000		$60,000
f.	G1	$20,000		$80,000

Building - A/c No. 170

Sr. No.	PR	Debit	Credit	Balance
c.	G1	$55,000		$55,000

Land - A/c No. 172

Sr. No.	PR	Debit	Credit	Balance
b.	G1	$49,000		$49,000

Account payable − A/c No. 201

Sr. No.	PR	Debit	Credit	Balance
h.	G1		$1,150	$1,150
j.	G1		$1,333	$2,483
m.	G1	$1,150		$1,150

Notes Payable − A/c No. 250

Sr. No.	PR	Debit	Credit	Balance
b.	G1		$42,700	$42,000
f.	G1		$10,500	$53,200

Common Stock −A/c No. 307

Sr. No.	PR	Debit	Credit	Balance
a.	G1		$165,000	$165,000

Dividends _A/c No. 319

Sr. No.	PR	Debit	Credit	Balance
o.	G1	$9,480		$9,480

Engineering Fees earned - A/c No. 402

Sr. No.	PR	Debit	Credit	Balance
e.	G1		$6,200	$6,200
g.	G1		$14,000	$20,200
i.	G1		$22,000	$42,200

Equipment rental expenses-A/c No. 602

Sr. No.	PR	Debit	Credit	Balance
j.	G1	$1,333		$1,333

Wages expenses −A/c No. 601

Sr. No.	PR	Debit	Credit	Balance
l.	G1	$1,200		$1,200
p.	G1	$1,200		$2,400

Repair expenses

Sr. No.	PR	Debit	Credit	Balance
n.	G1	$925		$925

Advertising Expenses − A/c No. 106

Sr. No.	PR	Debit	Credit	Balance
q.	G1	$2,500		$2,500

Summary Introduction

Introduction: Journal means recording the transactions made during the course of business in a chronological manner. Whereas journal entry means recording the transaction in a journal or by maintaining a book of accounts for future verification and taking other measures. Trial balance refers to a listing of all the accounts and later on matching with the other accounts so that complete verification is done.

To calculate: Journal entries, trial balance and general ledgers of the accounts.

Answer to Problem 2PSA

All the journal entries required are maintained and the ledger of the accounts is maintained with trial balance.

Explanation of Solution

Trial Balance (As on June 30)

Particulars	Debit	Credit
Cash	$22,945
Account Receivable	$29,000
Prepaid Expenses	$3,000
Office Equipment	$6,150
Drafting Equipment	$80,000
Building	$55,000
Land	$49,000
Accounts Payable		$1,333
Notes Payable		$53,200
Common Stock		$165,000
Dividends	$9,480
Engineering Fees Earned		$42,200
Equipmenmt Rental Expenses	$1,333
Wages Expenses	$2,400
Repair Expenses	$925
Adverstising Expenses	$2,500
Total	$261,733	$261,733