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

Required Information [The following information opplies to the questions disployed below.] On December 1, Year 1, John and Patty Driver formed o corporation called Susquehonno Equipment Rentals. The new corporation was able to begin operations immedistely by purchasing the ossets and taking over the location of Rent-lt, 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 annuslly on December 31. During December of its first year of operations, the corporation entered into the following tronsactions. Dec. 1 Issucd to John and Patty Driver 21, eea shares of capital stock in exchange for a total of \$21e,eee cash. Dec. 1 Purchased for $192, eae all of the equipment formerly owned by Rent-1t. Paid $131, eee cash and issucd a 1 -year note payable for \$51, eae. The note, plus all 12 months of accrued interest, are due Novenber 38, Year 2. Dec. 1 Paid $9,390 to shapiro Realty as three months 2 advance rent on the rental yard and office formerly occupied by Rent-It. Dec. 4 Purchased office supplies on account fron Modern office Co., \$1,3e. Paynent due in 30 days. (These supplies are expected to last for several nonths; debit the office supplies asset account.) Dec. 8 Received $8,408 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned Rental Fecs.) Dec.12 Paid salaries of $5,180 for the first two wecks in Decerber. Dec.15 Excluding the McNamer advance, equipnent rental fecs earned during the first 15 days of December amounted to $18,700, of which $12,100 was received in cash. Dec.17 Purchased on account from Earth Movers, Inc., $890 in parts necded to perform basic maintenance on a rental tractor. Payment is due in 19 days. Dec. 23 Collected $2,2 e of the accounts receivable recorded on December 15 . Dec.26 Rented a backhoe to Mission Landscaping at a price of $390 per day, to be paid when the backhoe is returned. Mission Landscaping expects to kecp the backhoe for about two or three wceks. Dec. 26 Paid biweckly salaries, \$5,108. Dec. 27 Paid the account payabie to Earth Movers, Inc., $900. Dec.28 Declared a dividend of 19 cents per sharc, payable on January 15, Year 2. Dec.29 Susquchanna Equipment Rentals was naned, along with Mission Landscaping and collier Construction, as a codefendant in a \$28, 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 working hours on 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 compony's legal and financial responsibility for this accident, if any, cannot be determined at this tine. (Note: This event does not nequire 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 \$9,120. This policy protects the conpany 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 on Decerber 26. Dec.31 Received a bill fron Universal Utilities for the nonth of Decenber, \$6ge. Paynent is due in 39 days. Dec.31 Equipment rental fees carned during the second half of Decerber amounted to $20,580, of which $16, eee was received in cash. Data for Adjusting Entrles in Year 1 a. The odvonce poyment of rent on December 1 covered s period of three months. b. The onnusl interest rate on the note poysble 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 value 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 $610. e. During December, the compsny earned $4,400 of the rental fees poid in odvance by McNamer Construction Company on December 8. f. As of December 31, six doys' rent on the bockhoe rented to Mission Londscoping on December 26 hos been earned. g. Solaries earned by employees since the last poyroll date (December 26 ) omounted to $1,800 ot month-end. h. It is estimsted that the compony is subject to o 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. Prepare closing entries and post to ledger accounts. (If no entry is required for a transaction/event, select "No journal entr) required" in the first account field. Do not round intermediate calculations.)