Holden Graham started The Graham Co., a new business that began operations on May 1. The Graham Co. completed the following transactions during its first month of operations.
May 1 H. Graham invested $44,000 cash in the company in exchange for its common stock.
1 The company rented a furnished office and paid $2,500 cash for May’s rent..
3 The company purchased $1,940 of office equipment on credit.
5 The company paid $800 cash for this month’s cleaning services.
8 The company provided consulting services for a client and immediately collected $5,300 cash.
12 The company provided $2,600 of consulting services for a client on credit.
15 The company paid $800 cash for an assistant’s salary for the first half of this month.
20 The company received $2,600 cash payment for the services provided on May 12.
22 The company provided $3,700 of consulting services on credit.
25 The company received $3,700 cash payment for the services provided on May 22.
26 The company paid $1,940 cash for the office equipment purchased on May 3.
27 The company purchased $85 of advertising in this month’s (May) local paper on credit; cash payment is due June 1.
28 The company paid $800 cash for an assistant’s salary for the second half of this month.
30 The company paid $350 cash for this month’s telephone bill.
30 The company paid $260 cash for this month’s utilities.
31 The company paid $1,500 cash in dividends to the owner (sole shareholder).
1. Value
Required:
2. Enter the amount of each transaction on individual items of the accounting equation. (Enter the transactions in the given order. Enter reductions to account balances with a minus sign.)
Aracel Engineering completed the following transactions in the month of June.
a. To launch the company, Jenna Aracel, the owner, invested $185,000 cash, office equipment with a value of $8,100, and $76,000 of drafting equipment in exchange for common stock.
b. The company purchased land worth $52,000 for an office by paying $8,000 cash and signing a long-term note payable for $44,000.
c. The company purchased a portable building with $53,000 cash and moved it onto the land acquired inb.
d. The company paid $4,200 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 $8,800 cash.
f. The company purchased $31,000 of additional drafting equipment by paying $9,200 cash and signing a long-term note payable for $21,800.
g. The company completed $18,000 of engineering services for a client. This amount is to be received in 30 days.
h. The company purchased $1,500 of additional office equipment on credit.
i. The company completed engineering services for $27,000 on credit.
j. The company received a bill for rent of equipment that was used on a recently completed job. The $1,486 rent cost must be paid within 30 days.
k. The company collected $10,000 cash in partial payment from the client described in transaction g.
l. The company paid $2,100 cash for wages to a drafting assistant.
m. The company paid $1,500 cash to settle the account payable created in transaction h.
n. The company paid $1,025 cash for minor maintenance of its drafting equipment.
o. The company paid $9,120 cash in dividends.
p. The company paid $1,500 cash for wages to a drafting assistant.
q. The company paid $4,300 cash for advertisements on the Web during June.
Required:
1. Prepare general journal entries to record these transactions.
2. Post the journal entries from part 1 to the ledger accounts.
3. Prepare a trial balance as of the end of June.
a. Depreciation on the company’s equipment for 2013 is computed to be $12,000.
b. The Prepaid Insurance account had a $8,000 debit balance at December 31, 2013, before adjusting for the costs of any expired coverage. An analysis of the company’s insurance policies showed that $1,850 of unexpired insurance coverage remains.
c. The Office Supplies account had a $420 debit balance on December 31, 2012; and $2,680 of office supplies were purchased during the year. The December 31, 2013, physical count showed $496 of supplies available.
d. One-fourth of the work related to $11,000 of cash received in advance was performed this period.
e. The Prepaid Insurance account had a $5,500 debit balance at December 31, 2013, before adjusting for the costs of any expired coverage. An analysis of insurance policies showed that $3,650 of coverage had expired.
f. Wage expenses of $3,000 have been incurred but are not paid as of December 31, 2013.
Prepare adjusting journal entries for the year ended (date of) December 31, 2013, for each of these separate situations. Assume that prepaid expenses are initially recorded in asset accounts. Also assume that fees collected in advance of work are initially recorded as liabilities.