Binbutti Engineering, a sole proprietorship, completed the following transactions during July 2014, the third month of operations:
July 1 Bishr Binbutti, the owner, invested $300,000 cash, office equipment with a value of $12,000, and $90,000 of drafting equipment in the business.
2 Purchased land for an office. The land was worth $108,000, which was paid with $10,800 cash and a long-term note payable for $97,200.
3 Purchased a portable building with $150,000 cash and moved it onto the land. 5 Paid $12,000 cash for the premiums on two one-year insurance policies.
7 Completed and delivered a set of plans for a client and collected $1,400 cash.
9 Purchased additional drafting equipment for $45,000. Paid $21,000 cash and signed a long-term note payable for the $24,000 balance. 10 Completed $4,000 of engineering services for a client. This amount is to be paid within 30 days. 12 Purchased $4,500 of additional office equipment on credit.
15 Completed engineering services for $7,000 on credit.
16 Received a bill for rent on equipment that was used on a completed job. The $1 3,800 rent must be paid within 30 days.
17 Collected $400 from the client of July 10.
19 Paid $12,000 wages to the drafting assistants.
22 Paid the account payable created on July 12.
25 Paid $1,350 cash for some repairs to an item of drafting equipment.
26 Binbutti withdrew $800 cash from the business for personal use.
30 Paid $12,000 wages to the drafting assistants.
31 Paid $6,000 cash for advertising in the local newspaper during July.
Required
1. Prepare General Journal entries to record the transactions. Use page 1 for the journal.
2. Set up the following accounts (use the balance column format or T-accounts), entering the balances brought forward from June 30, 2014: Cash (101) $26,000; Accounts Receivable (106) $3,000; Prepaid Insurance (128) $500; Office Equipment (163) $1,700; Drafting Equipment (167) $1,200; Building (173) $42,000; Land (183) $28,000; Accounts Payable (201) $1,740; Long-Term Notes Payable (251) $24,000; Bishr Binbutti, Capital (301) $54,000; Bishr Binbutti, Withdrawals (302) $1,000; Engineering Fees Earned (401) $29,600; Wages Expense (623) $4,000; Equipment Rental Expense (645) $1,000; Advertising Expense (655) $640; and Repairs Expense (684) $300.
3. Post the entries to the accounts and enter the balance after each posting.
4. Prepare a trial balance at July 31, 2014.