COMPREHENSIVE PROBLEM --PART 1 Susquehanna Equipment Rentals On December 1, 2011, John and Patty Driver formed a corporation called Susquehana Equipment Rentals. The new corporation was able to begin operations immediately by purchasing the assets and taking over the location of Rent-It, an equipment rental company that was going out of business. During December, the corporation entered into the following transactions: Dec 1 Issued to John and Patty Driver 20,000 shares of capital stock in exchange for $250,000 cash. Dec 1 Purchased for $260,000 all of the equipment formerly owned by Rent-it. Paid $160,000 cash and issued a one-year note payable for $100,000. The note is due on Nov. 30, 2012, Dec 1 Paid $15,000 to Shapiro Realty as three month's advance rent on the rental yard and office formerly occupied by Rent-It. Dec 4 Purchased office supplies on account from Modern Office Co., $850. Payment in 30 days. Dec 8 Received $13,000 cash as advance payment on equipment rental from Mc Namer Construction Company. Dec 12 Paid salaries for the first two weeks of December $7,500. Dec 15 Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to $24,000, of which $15,000 was received in cash. Dec 17 Purchased on account from Earth Movers, Inc. $1,300 in parts needed to repair a rental tractor. Payment is due in 10 days. Dec 23 Collected $5,000 of the accounts receivable recorded on December 15, Dec 26 Rented a backhoe to Mission Landscaping at a price of $315 per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two or three weeks. Dec 26 Paid salaries of $7,500. Dec 27 Paid the account payable to Earth Movers the amount owed $1,300. Dec 28 Declared a dividend of 10 cents per share, payable on January 15, 2012 Dec 29 Purchased a 12 month insurance policy for $12,000. The policy goes into effect on Jan 1, 2012. Dec 31 Received a bill from Universal Utilities for the month of December $1,100. Payment is due in 30 days. Dec 31 Equipment rental fees earned during the second half of December amounted to $23,000, of which $10,000 was received in cash. INSTRUCTIONS 1) Prepare general journal entries for the December transactions. 2) After recording all journal entries, post them to the General Ledger Accounts. 3) Prepare the Unadjusted Trial Balance. ***Turn in General Journal, General Ledger and Unadjusted Trial Balance on Wednesday, September 25th. ADJUSTING ENTRIES-always occur at end of period. ***never use cash!!! 1) On Nov 1. one year of insurance was purchased for $1200. It was properly con Prepaid Insurance. On December 31", what is the adjusting entry? DR. CR. Dec 31 Insurance Expense $200 Unexpired Insurance 200 2) On January 1st, purchased a Building for $90,000. The building is expected to last 30 years with a salvage value of $30,000. Make the Dec. 31" adjusting entry for depreciation? DR. CR. Dec. 31 Depreciation Expense 2,000 Accumulated Depreciation-Bldg. 2,000 3) On Dec. 1", received cash of $2,000 for work to be completed in Dec. and Jan. Make the adjusting entry on Dec. 31". DR. CR. Dec. 31 Unearned Revenue 1,000 Service Revenue 1,000 4) Salaries are paid every Friday. This year, Dec. 31" falls on a Wednesday. There are 30 employees who make $200 per day. What is the adjusting entry for Dec. 31"? DR. CR Dec. 31Salary Expense 18,000 Salary Payable 18,000 S) On Dec. 31" services that are unbilled are estimated to be $5.000. Make the Dec. 31 adjusting entry? DR. CR. Dec 31 Accounts Receivable 5,000 Service Revenue 5,000 6) Supplies account has a debit balance of $5,000. When counting the number of supplies on hand in the storage room, the total amount of supplies on hand was $2,700. Make the Dec. 31" adjusting entry DR. CR $2,300 Dec 31 Supplies Expense Supplies $2,300