1-a. Journalize the December transactions. Do not record adjusting entries at this point.

1-b. Prepare the necessary adjusting entries for December.

1-c. Prepare closing entries and post to ledger accounts.

Required Information [The following information opplies to the questions displayed below.] On December 1, Year 1, John and Patty Driver formed o corporation called Susquehanna Equipment Rentals. The new corporation wos able to begin operations immediately by purchosing the ossets and taking over the location of Rent-It, on equipment rental compony that wos going out of business. The newly formed compony uses the following occounts. The corporation performs adjusting entries monthly. Closing entries are performed annually on December 31. During December of its first year of operations, the corporation entered into the following tronsactions. Dec. 1 Issued to John and Patty Driver 23, eee shares of capital stock in exchange for a total of $23e,eee cash. Dec. 1 Purchased for $278,490 all of the equipment formerly owned by Rent-It. Paid $137, eee cash and issued a 1 -year note payable for $141,480. The note, plus all 12 nonths of accrued interest, are due Novenber 30, Year 2. Dec. 1 Paid \$9,9ee to Shapiro Realty as three months' advance rent on the rental yard and office formerly occupied by Rent-It. Dec. 4 Purchased office supplies on account fron Modern office Co., \$1, gae. Paynent due in 38 days. (These supplies are expected to last for several months; debit the office supplies asset account.) Dec. 8 Received $8,100 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned Rental Fecs.) Dec.12 Paid salaries of $4,680 for the first two wecks in Decerber. Dec.15 Excluding the McNamer advance, equipnent rental fecs earned during the first 15 days of December anounted to $18,90, of which $12,500 was received in cash. Dec.17 Purchased on account from Earth Movers, Inc., $70 in parts needed to perform basic maintenance on a rental tractor. Paynent is due in 18 days. Dec. 23 Collected $2,7e of the accounts receivable recorded on December 15. Dec.26 Rented a backhoe to Mission Landscaping at a price of $328 per day, to be paid when the backhoe is returned. Mission Landscaping expects to kecp the bsckhoe for about two or three weeks. Dec. 26 Paid biweckly salaries, \$4,6e. Dec.27 Paid the account payabie to Earth Movers, Inc., \$7ee. Dec. 28 Declared a dividend of 10 cents per share, payable on January 15 , Year 2. Dec.29 Susquehanna Equipment Rentals was naned, along with Mission Landscaping and Collier Construction, as a codefendant in a \$22, eae lawsuit filed on behalf of Kevin Davenport. Mission Landscaping had left the rented backhoe in a fenced construction site owned by Collier construction. After warking hours an Decenber 26 , Davenport had climbed the fence to play on parked construction equipnent. While playing on the backhoe, he fell and broke his arn. The extent of the company's legal and financial responsibility for this accident, if any, cannot be determined at this tine. (Mote: This event does not require a journal entry at this tine, but may require disclosure in notes accompanying the statements.) Dec.29 Purchased a 12-month public liability insurance policy for \$9,360. This policy protects the canpany against liability for injuries and property danage caused by its equipnent. However, the policy goes into effect on January 1, Year 2, and affords no coverage for the injuries sustained by Kevin Davenport an Decerber 26. Dec.31 Received a bill fron Universal Utilities for the nonth of Decenber, $690. Paynent is due in 39 days. Dec.31 Equipment rental fees earned during the second half of Decenber amounted to $2,380, of which $15,900 was received in cash. Data for Adjusting Entrles in Year 1 a. The odvonce poyment of rent on December 1 covered a period of three months. b. The onnual interest rote on the note poyoble to Rent-lt is 6 percent. c. The rental equipment is being deprecioted by the stroight-line method over a period of eight years. Any solvoge volue at the end of its useful life is expected to be negligible and immaterial. d. Office supplies on hand at December 31 are estimated at $640. e. During December, the company earned $3,800 of the rental fees poid in advance by McNamer Construction Company on December 8. f. As of December 31, six doys' rent on the bockhoe rented to Mission Landscoping on December 26 hos been earned. g. Salaries earned by employees since the lost poyroll date (December 26 ) amounted to $1,500 at month-end. h. It is estimated that the compony is subject to a combined federal and state income tox rate of 40 percent of income before income toxes (total revenue minus all expenses other thon income toxes). These toxes will be poyable in Year 2. Vew tranagction llat Mew journal entry workaheat ( \begin{tabular}{|c|c|c|c|c|c|} \hline & No & Date & General Journal & Deblt & Credlt \\ \hline \multirow[t]{2}{*}{p} & 1 & Dec. 1 & Cash & 230,000 & \\ \hline & & & & & 230,000 \\ \hline \multirow[t]{3}{*}{>} & 2 & Dec. 1 & Rental equipment & 278,400 & \\ \hline & & & Cash & & 137,000 \\ \hline & & & Notes payable & & 141,400 \\ \hline & 3 & Dec. 1 & Prepaid rent & 9,900 & \\ \hline & & & Cash & & 9,900 \\ \hline \multirow[t]{2}{*}{>} & 4 & Dec. 4 & Office supplies & 1,800 & \\ \hline & & & Accounts payable & & 1,800 \\ \hline & 5 & Dec. 8 & Cash & 8,100 & \\ \hline & & & Unesamed rental fees & & 8,100 \\ \hline \multirow[t]{2}{*}{p} & 6 & Dec. 12 & Salaries expense & 4,600 & \\ \hline & & & Cash & & 4,600 \\ \hline & 7 & Dec. 15 & Cash & 12,500 & \\ \hline & & & Acoounts receivable & 6,400 & \\ \hline & & & Rental fees esmed & & 18,900 \\ \hline & 8 & Dec. 17 & Maintenance expense & 700 & \\ \hline & & & Accounts payable & & 700 \\ \hline \multirow[t]{2}{*}{>} & 9 & Dec. 23 & Cash & 2,700 & \\ \hline & & & Accounts receivable & & 2,700 \\ \hline> & 10 & Dec. 26 & No journal entry required & & \\ \hline & 11 & Dec. 26 & Salaries expense & 4,600 & \\ \hline & & & Cash & & 4,600 \\ \hline & 13 & Dec. 28 & Dividends & 2,300 & \\ \hline & & & Dividends payable & & 2,300 \\ \hline> & 14 & Dec. 29 & No journal entry required & & \\ \hline \multirow[t]{2}{*}{p} & 15 & Dec. 29 & Unexpired insurance & 9,360 & \\ \hline & & & Cash & & 9,360 \\ \hline \multirow[t]{2}{*}{>} & 16 & Dec. 31 & Utilities expense & 690 & \\ \hline & & & Accounts payable & & 690 \\ \hline> & 17 & Dec. 31 & Cash & 15,900 & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|} \hline & No & Date & General Journal & Deblt & Credlt \\ \hline \multirow[t]{2}{*}{>} & 1 & Dec. 31 & Rent expense & 3,100 & \\ \hline & & & Prepaid rent & & 3,100 \\ \hline \multirow[t]{2}{*}{>} & 2 & Dec. 31 & Interest expense & & \\ \hline & & & Interest paryable & & \\ \hline \multirow[t]{2}{*}{>} & 3 & Dec. 31 & Depreciation expense & & \\ \hline & & & Acoumulated depreciation: rental equipment & & \\ \hline \multirow[t]{2}{*}{>} & 4 & Dec. 31 & Office supplies expense & & \\ \hline & & & Office supplies & & \\ \hline \multirow[t]{2}{*}{} & 6 & Dec. 31 & Accounts receivable & & \\ \hline & & & Rental fees earned & & \\ \hline \multirow[t]{2}{*}{>} & 7 & Dec. 31 & Salaries expense & & \\ \hline & & & Salaries payable & & \\ \hline \multirow[t]{2}{*}{>} & B & Dec. 31 & Income taxes expense & & \\ \hline & & & Incorne taxes payable & & \\ \hline \end{tabular} Req 1A Req 1C