23 T fx M N A Question 7 LO14+L015 (30 marks) D 9 H Binbutti Engineering, a sole proprietorship, completed the following transactions during July 2020, the third month of operations: July 1 2 Bob Binbutti, the owner, Invested $300,000 cash, office equipment with a value of $12,000, and $90,000 of drafting equipment in the business. 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 $13,800 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. (1) Prepare journal entries to record the transactions. Use page 1 for the journal. (2) Set up the following general ledger accounts (use the balance column format or T-accounts), entering the balances brought forward from June 30, 2020: Cash (101) $26,000; Accounts Receivable (106) $3,000; Prepaid Insurance (128) $500; Office Equipment (163) $1,700; Drafting Equipment (167) $1,200; Build-Ing (173) $42,000; Land (183) $28,000; Accounts Payable (201) $1,740; Long-Term Notes Payable (251) $24,000; Bob Binbutti, Capital (301) $54,000; Bob Binbutti, Withdrawals (302) $1,000; Engineering Rev-enue (401) $29,600; Wages Expense (623) $4,000; Equipment Rental Expense (645) $1,000; Advertising Expense (655) $640; and Repairs Expense (684) $300. Post the entries to the general ledger accounts and enter the balance after each posting. (3) Prepare a trial balance at July 31, 2020. (4) Using the trial balance prepared in (4), prepare an income statement and statement of changes in equity for the three months ended July 31, 2020, and a balance sheet at July 31, 2020. 2 24 S (1) (2) 26 GENERAL JOURNAL Page G1 Account Name Account # Account Nar 27 Date Account Titles and Explanation PR 28 01-05 cash Debit $300,000 Credit 29 30 31 office equipment Drafting equipment Mr.B's capital $12,000 $90,000 $402,000 32 23 Land 24 cash $108,000 $10,800 25 Jan terme note miable + = Question 1 4 Question 2 4 Question 3 4 Question 4 Question 5