Chapter 2, Problem 5GLP

1.

To determine

Introduction: A journal is used to record financial transactions. It shows debits and credits of each transaction. The process of recording transactions is called journalizing. After journalizing, the transactions are posted into ledgers.

The journal entries for given transactions

Explanation of Solution

1. Journal entries to record the transactions in the month of June

S.no	Account title and Explanation	PR	Debit	Credit
a.	Cash	101	$100,000
	Office equipment	163	$5,000
	Drafting equipment	164	$60,000
	J.A Capital	301		$165,000
	Owners investment in business
b.	Land	172	$49,000
	Cash	101		$6,300
	Notes payable	250		$42,700
	Record purchase of land for cash and note payable
c.	Building	170	$55,000
	Cash	101		$55,000
	Record purchase of building for cash
d.	Prepaid insurance	108	$3,000
	Cash	101		$3,000
	Record payment of cash for 18 month insurance
e.	Cash	101	$6,200
	Engineering fees earned	402		$6,200
	Record receipt of cash for plan completed
f.	Drafting equipment	164	$20,000
	Cash	101		$9,500
	Notes payable	250		$10,500
	Record purchase of drafting equipment for cash and note payable
g.	Accounts receivable	106	$14,000
	Engineering fees earned	402		$14,000
	Record earnings of fees
h.	Office equipment	163	$1,150
	Accounts payable	201		$1,150
	Record purchase of office equipment on credit
i.	Accounts receivable	106	$22,000
	Engineering fees earned	402		$22,000
	Record earnings of fees
j.	Equipment rental expense	602	$1,333
	Accounts payable	2o1		$1,333
	Record accrued rental equipment rent
k.	Cash	101	$7,000
	Accounts receivable	106		$7,000
	Record receipt of cash on receivables
l.	Wage expense	601	$1,200
	Cash	101		$1,200
	Record payment of wages to assistant
m.	Accounts payable	201	$1,150
	Cash	101		$1,150
	Record payment of cash for accounts payable
n.	Repairs equipment	604	$925
	Cash	101		$925
	Record payment of cash for repairs
o.	J.A withdrawals	302	$9,480
	Cash	101		$9,480
	Record withdrawals by owner for personal use
P.	Wages expenses	601	$1,200
	Cash	101		$1,200
	Record payment of cash for wages
q.	Advertising expense	603	$2,500
	Cash	101		$2,500
	Record payment of cash for advertising

2.

To determine

Introduction: A journal is used to record financial transactions. It shows debits and credits of each transaction. The process of recording transactions is called journalizing. After journalizing, the transactions are posted into ledgers.

The given ledger accounts

Explanation of Solution

Posting of journal entries in ledgers

CashAccount no 101

Date	PR	Account title	Debit	Credit	Balance
a.		A.N Capital	$100,000		$100,000
b.		Land		$6,300	$93,700
c.		Building		$55,000	$38,700
d.		Prepaid insurance		$3,000	$35,700
e.		Engineering fees earned	$6,200		$41,900
f.		Drafting equipment		$9,500	$32,400
k.		Accounts receivable	$7,000		$39,400
l.		Wages expenses		$1,200	$38,200
m.		Accounts payable		$1,150	$37,050
n.		Repairs expenses		$925	$36,125
o.		J.A withdrawals		$9,480	$26,645
p.		Wages expense		$1,200	$25,445
q.		Advertising expense		$2,500	$22,945

Accounts receivableAccount no 106

Date	PR	Account title	Debit	Credit	Balance
g.		Engineering fees earned	$14,000		$14,000
i.		Engineering fees earned	$22,000		$36,000
k.		Cash		$7,000	$29,000

Prepaid insuranceAccount no 108

Date	PR	Account title	Debit	Credit	Balance
d.		Cash	$3,000		$3,000

Drafting equipmentAccount no 164

Date	PR	Account title	Debit	Credit	Balance
a.		J.A Capital	$60,000		$60,000
f.		Cash	$9,500		$69,500
		Notes payable	$10,500		$80,000

BuildingAccount no 170

Date	PR	Account title	Debit	Credit	Balance
c.		Cash	$55,000		$55,000

LandAccount no 172

Date	PR	Account title	Debit	Credit	Balance
b.		Cash	$6,300		$6,300
		Notes payable	$42,700		$49,000

Office equipmentAccount no 163

Date	PR	Account title	Debit	Credit	Balance
a.		J.A Capital	$5,000		$5,000
h.		Accounts payable	$1,150		$6,150

Accounts PayableAccount no 201

Date	PR	Account title	Debit	Credit	Balance
h.		Office equipment		$1,150	$1,150
j.		Rental equipment expense		$1,333	$2,483
m.		Cash	$1,150		$1,333

Notes payableAccount no 250

Date	PR	Account title	Debit	Credit	Balance
b.		Land		$42,700	$42,700
f.		Drafting equipment		$10,500	$53,200

J.A CapitalAccount no 301

Date	PR	Account title	Debit	Credit	Balance
a.		Cash		$100,000	$100,000
		Office equipment		$5,000	$105,000
d.		Drafting equipment		$60,000	$165,000

J.A WithdrawalsAccount no 302

Date	PR	Account title	Debit	Credit	Balance
o.		Cash	$9,480		$9,480

Engineering Fees earnedAccount no 402

Date	PR	Account title	Debit	Credit	Balance
e.		Cash		$6,200	$6,200
g.		Accounts receivable		$14,000	$20,200
I,		Accounts receivable		$22,000	$42,200

Wages expenseAccount no 601

Date	PR	Account title	Debit	Credit	Balance
l.		Cash	$1,200		$1,200
p.		Cash	$1,200		$2,400

Equipment rental expensesAccount no 602

Date	PR	Account title	Debit	Credit	Balance
j.		Accounts payable	$1,333		$1,333

Advertising expensesAccount no 603

Date	PR	Account title	Debit	Credit	Balance
q.		Cash	$2,500		$2,500

Repair expensesAccount no 604

Date	PR	Account title	Debit	Credit	Balance
n.		Cash	$925		$925

3.

To determine

Introduction: A journal is used to record financial transactions. It shows debits and credits of each transaction. The process of recording transactions is called journalizing. After journalizing, the transactions are posted into ledgers.

The trial balance from given information

Answer to Problem 5GLP

Trial balance total $261,733

Explanation of Solution

Trial balance

Account title	Debit	Credit
Cash	$22,945
Accounts receivable	$29,000
Prepaid insurance	$3,000
Drafting equipment	$80,000
Office equipment	$6,150
Land	$49,000
Building	$55,000
Accounts payable		$1,333
Note payable		$53,200
J.A Capital		$165,000
J.A Withdrawals	$9,480
Engineering fees earned		$42,200
wages expense	$2,400
Equipment rental expense	$1,333
Advertising expense	$2,500
Repair expenses	$925
Total	$261,733	$261,733