Sunday 20 May 2012

Problem 2-2A Preparing and posting journal entries; preparing a trial balance L.O. C3, C4, A1, P1, P2 Shelton Engineering completed the following transactions in the month of June.


Problem 2-2A Preparing and posting journal entries; preparing a trial balance L.O. C3, C4, A1, P1, P2
Shelton Engineering completed the following transactions in the month of June.
  
a.

Shana Shelton, the owner, invested $105,000 cash, office equipment with a value of $6,000, and $45,000 of drafting equipment to launch the company in exchange for common stock.
b.

The company purchased land worth $54,000 for an office by paying $5,400 cash and signing a long term note payable for $48,600.
c.

The company purchased a portable building with $75,000 cash and moved it onto the land   acquired in b.
d.

The company paid $6,000 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 $5,700 cash.
f.

The company purchased $22,500 of additional drafting equipment by paying $10,500 cash and signing  a long-term note payable for $12,000.
g.

The company completed $12,000 of engineering services for a client. This amount is to be received in 30 days.
h.

The company purchased $2,250 of additional office equipment on credit.
i.

The company completed engineering services for $18,000 on credit.
j.

The company received a bill for rent of equipment that was used on a recently completed job. The $1,200 rent cost must be paid within 30 days.
k.

The company collected $7,200 cash in partial payment from the client described in transaction g.
l.

The company paid $1,500 cash for wages to a drafting assistant.
m.

The company paid $2,250 cash to settle the account payable created in transaction h.
n.

The company paid $675 cash for minor maintenance of its drafting equipment.
o.

The company paid $9,360 cash for dividends.
p.

The company paid $1,500 cash for wages to a drafting assistant.
q.

The company paid $3,000 cash for advertisements in the local newspaper during June.
  
Required:
1.
Record these transactions using the following titles: Cash, Accounts Receivable, Prepaid Insurance, Office Equipment, Drafting Equipment, Building, Land, Accounts Payable, Notes Payable, Common Stock, Dividends, Engineering Fees Earned, Wages Expense, Equipment Rental Expense, Advertising Expense, and Repairs Expense.(Omit the "$" sign in your response.)
  

General Journal
Debit
Credit
a.
  Cash correct
 correct  


   Office equipment correct
 correct  


  Drafting equipment correct
 correct  


       Common stock correct

156,000 correct  

  


b.
  Land correct  
54,000 correct  


       Cash correct

 correct  

       Note payable correct

 correct  

  


c.
  Building correct
75,000 correct  


       Cash correct

75,000 correct  

       



  


d.
  Prepaid insurance correct
6,000 correct  


       Cash correct

6,000 correct  

    


e.
  Cash correct
5,700 correct  


       Engineering fees earned correct

5,700 correct  

  


f.
  Drafting equipment correct
22,500 correct  


       Cash correct

 correct  

        Note payable correct

 correct  

  


g.
  Accounts receivable correct
12,000 correct  


       Engineering fees earned correct

12,000 correct  

  


h.
  Office equipment correct
2,250 correct  


       Accounts payable correct

2,250 correct  

  


i.
  Accounts receivable correct
18,000 correct  


       Engineering fees earned correct

18,000 correct  

    


j.
  Equipment rental expense correct
1,200 correct  


       Accounts payable correct

1,200 correct  

  


k.
  Cash correct
7,200 correct  


       Accounts receivable correct

7,200 correct  

  


l.
  Wages expense correct
1,500 correct  


       Cash correct

1,500 correct  

  


m.
  Accounts payable correct
2,250 correct  


       Cash correct

2,250 correct  

  


n.
  Repairs expense correct
675 correct  


       Cash correct

675 correct  

  


o.
  Dividends correct
9,360 correct  


       Cash correct

9,360 correct  

  


p.
  Wages expense correct
1,500 correct  


       Cash correct

1,500 correct  

  


q.
  Advertising expense correct
3,000 correct  


       Cash correct

3,000 correct  


  
2.
Open the ledger accounts for the account titles referred in part 1 and post the journal entries from part 1 to the ledger accounts and enter the balance after each posting. (Record the transactions in given order. Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.)
  
Cash
Date

Debit


Credit  

Balance         
(a)

105,000 correct    


correct    

105,000 correct       
(b)

correct    


5,400 correct    

99,600 correct       
(c)

correct    


75,000 correct    

24,600 correct       
(d)

correct    


6,000 correct    

18,600 correct       
(e)

5,700 correct    


correct    

24,300 correct       
(f)

correct    


10,500 correct    

13,800 correct       
(k)

7,200 correct    


correct    

21,000 correct       
(l)

correct    


1,500 correct    

19,500 correct       
(m)

correct    


2,250 correct    

17,250 correct       
(n)

correct    


675 correct    

16,575 correct       
(o)

correct    


9,360 correct    

7,215 correct       
(p)

correct    


1,500 correct    

5,715 correct       
(q)

correct    


3,000 correct    

2,715 correct       
  
Accounts Receivable
Date

Debit


Credit

Balance         
(g)

12,000 correct    


correct    

12,000 correct       
(i)

18,000 correct    


correct    

30,000 correct       
(k)

correct    


7,200 correct    

22,800 correct       
  
Prepaid Insurance
Date

Debit


Credit

Balance         
(d)

6,000 correct    


correct    

6,000 correct       
  
Office Equipment
Date

Debit


Credit

Balance         
(a)

6,000 correct    


correct    

6,000 correct       
(h)

2,250 correct    


correct    

8,250 correct       
  
Drafting Equipment
Date

Debit


Credit

Balance         
(a)

45,000 correct    


correct    

45,000 correct       
(f)

22,500 correct    


correct    

67,500 correct       
  
Building
Date

Debit


Credit

Balance         
(c)

75,000 correct    


correct    

75,000 correct       
  
Land
Date

Debit


Credit

Balance         
(b)

54,000 correct    


correct    

54,000 correct       
  
Accounts Payable
Date

Debit


Credit

Balance         
(h)

correct    


2,250 correct    

2,250 correct       
(j)

correct    


1,200 correct    

3,450 correct       
(m)

2,250 correct    


correct    

1,200 correct       
  
Notes Payable
Date

Debit


Credit

Balance
(b)

correct    


48,600 correct    

48,600 correct       
(f)

correct    


12,000 correct    

60,600 correct       
  
Common Stock
Date

Debit


Credit

Balance         
(a)

correct    


156,000 correct    

156,000 correct       
  
Dividends
Date

Debit


Credit

Balance         
(o)

9,360 correct    


correct    

9,360 correct       
      
Engineering Fees Earned
Date

Debit


Credit

Balance         
(e)

correct    


5,700 correct    

5,700 correct       
(g)

correct    


12,000 correct    

17,700 correct       
(i)

correct    


18,000 correct    

35,700 correct       
  
Wages Expense
Date

Debit


Credit

Balance         
(l)

1,500 correct    


correct    

1,500 correct       
(p)

1,500 correct    


correct    

3,000 correct       
  
Equipment Rental Expense
Date

Debit


Credit

Balance         
(j)

1,200 correct    


correct    

1,200 correct       
  
Advertising Expense
Date

Debit


Credit

Balance         
(q)

3,000 correct    


correct    

3,000 correct       
  
Repairs Expense
Date

Debit


Credit

Balance         
(n)

675 correct    


correct    

675 correct       


  
3.
Prepare a trial balance as of the end of June. (Be sure to list assets in the order of their liquidity.The items in the Trial Balance should be grouped as follows: Assets, Liabilities, Equity, Revenues, and Expenses. Omit the "$" sign in your response.)
  
SHELTON ENGINEERING
Trial Balance
June 30
  
            Debit
     Credit
  Cash correct
$ 2,715 correct

  Accounts receivable correct
22,800 correct

  Prepaid insurance correct
 correct

  Office equipment correct
 correct

   Drafting equipment correct
 correct

  Building correct
 correct

  Land correct
 correct

  Accounts payable correct

$ 1,200 correct  
  Notes payable correct

60,600 correct  
  Common stock correct

156,000 correct  
  Dividends correct
9,360 correct

  Engineering fees earned correct

35,700 correct  
  Wages expense correct
 correct

   Equipment rental expense correct
 correct

  Advertising expense correct
 correct

  Repairs expense correct
  correct

  




  Totals
$ 253,500 correct
$ 253,500 correct  
  






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