Jenna Aracel, the owner, invested $215,000 cash, office equipment with a value o
ID: 2379527 • Letter: J
Question
Jenna Aracel, the owner, invested $215,000 cash, office equipment with a value of $5,100, and $61,000 of drafting equipment to launch the company.
The company purchased land worth $50,000 for an office by paying $6,700 cash and signing a long-term note payable for $43,300.
The company purchased a portable building with $60,000 cash and moved it onto the land acquired in b.
The company completed and delivered a set of plans for a client and collected $9,500 cash.
The company purchased $33,000 of additional drafting equipment by paying $11,000 cash and signing a long-term note payable for $22,000.
The company completed $16,000 of engineering services for a client. This amount is to be received in 30 days.
The company received a bill for rent of equipment that was used on a recently completed job. The $1,686 rent cost must be paid within 30 days.
Explanation / Answer
a. Shania Shelton, the owner, invested $105,000 cash, office equipment with a value of $6,000, and $45,000 of drafting equipment to launch the business
Dr Cash $105,000
Dr Office equipment $6,000
Dr Drafting equipment $45,000
Cr Owner's equity $156,000
b. Purchased land worth $54,000 for an office by paying $5,400 cash and signing a long-term note payable for $48,600.
Dr Land $54,000
Cr Cash $5,400
Cr L-T Note payable $48,600
c. Purchased a portable building with $75,000 cash and moved it onto the land acquired in b.
Dr Building $75,000
Cr Cash $75,000
d. Paid $6,000 cash for the premium on an 18-month insurance policy.
Dr Prepaid insurance $6,000
Cr Cash $6,000
e. Completed and delivered a set of plans for a client and collected $5,700 cash.
Dr Cash $5,700
Cr Services revenue $5,700
f. Purchased $22,500 of additional drafting equipment by paying $10,500 cash and signing a longterm note payable for $12,000
Dr Drafting equipment $22,500
Cr Cash $10,500
Cr L-T Note payable $12,000
g. Completed $12,000 of engineering services for a client. This amount is to be received in 30 days
Dr Accounts receivable $12,000
Cr Services revenue $12,000
h. Purchased $2,250 of additional office equipment on credit
Dr Office equipment $2,250
Cr Accounts payable $2,250
i. Completed engineering services for $18,000 on credit
Dr AR $18,000
Cr Services revenue $18,000
j. Received a bill for rent of equipment that was used on a recently completed job. The $1,200 rent must be paid within 30 days
Dr Rental of equipment expense $1,200
Cr Accounts payable $1,200
k. Collected $7,200 cash in partial payment from the client described in transaction g
Dr Cash $7,200
Cr AR $7,200
l. Paid $1,500 cash for wages to a drafting assistant
Dr Wages expense $1,500
Cr Cash $1,500
m. Paid $2,250 cash to settle the account payable created in transaction h
Dr AP $2,250
Cr Cash $2,250
n. Paid $675 cash for minor repairs to the drafting equipment
Dr Repairs expense $675
Cr Cash $675
o. Shelton withdrew $9,360 cash for personal use
Dr Owner's drawing $9,360
Cr Cash $9,360
p. Paid $1,500 cash for wages to a drafting assistant
Dr Wages expense $1,500
Cr Cash $1,500
q. Paid $3,000 cash for advertisements in the local newspaper during June
Dr Advertising expense $3,000
Cr Cash $3,000
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