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connect' [ The following information applies to the questions displayed below. ] On December 1 , Year 1 , John and Patty Driver formed a
connect'
The following information applies to the questions displayed below.
On December Year John and Patty Driver formed a corporation called Susquehanna Equipment Rentals. The new corporation was able to begin operations immediately by purchasing the assets and taking over the location of RentIt an equipment rental company that was going out of business. The newly formed company uses the following accounts.
tableCashShare CapitalAccounts Receivable,Retained EarningsPrepaid Rent,DividendsUnexpired Insurance,Income SummaryOffice Supplies,Rental Fees EarnedRental Equipment,Salaries ExpenseAccumulated Depreciation: Rental,EquipmentMaintenance ExpenseNotes Payable,Utilities ExpenseAccounts Payable,Rent ExpenseInterest Payable,Office Supplies ExpenseSalaries Payable,Depreciation ExpenseDividends Payable,Interest ExpenseUnearned Rental Fees,Income Taxes ExpenseIncome Taxes Payable,
The corporation performs adjusting entries monthly. Closing entries are performed annually on December During December of its first year of operations, the corporation entered into the following transactions.
Dec. Issued to John and Patty Driver new shares in exchange for a total of $ cash.
Dec. Purchased for $ all of the equipment formerly owned by Rentlt Paid $ cash and issued a year note payable for $ The note, plus all months of accrued interest, are due November Year
Dec. Paid $ to Shapiro Realty as three months' advance rent on the rental yard and office formerly occupied by RentIt
Dec. Purchased office supplies on account from Modern Office Co $ Payment due in days. These supplies are expected to last for several months; debit the Office Supplies asset account.
Dec. Received $ cash as advance payment on equipment rental from McNamer Construction Company. Credit Unearned Rental Fees.
Dec. Paid salaries of $ for the first two weeks in December.
Dec. Excluding the McNamer advance, equipment rental fees earned during the first days of December amounted to $ of which $ was received in cash.
Dec. Purchased on account from Earth Movers, Inc., $ in parts needed to perform basic maintenance on a rental tractor. Payment is due in days.
Dec. Collected $ of the accounts receivable recorded on December
Dec. Rented a backhoe to Mission Landscaping at a price of $ per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two or three weeks.
Dec. Paid biweekly salaries, $
Dec. Paid the account payable to Earth Movers, Inc., $
Dec. Declared a dividend of cents per share, payable on January Year
Dec. Susquehanna Equipment Rentals was named, along with Mission Landscaping and Collier Construction, as a codefendant in a $ 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 December Davenport had climbed the fence to play on parked construction equipment. While playing on the backhoe, he fell and broke his arm. The extent of the company's legal and financial responsibility for this accident, if any, cannot be determined at this time. Note: This event does not require a journal entry at this time, but may require disclosure in notes accompanying the statements.
Dec. Purchased a month public liability insurance policy for $ This policy protects the company against liability for injuries and property damage caused by its equipment. However, the policy goes into effect on January Year and affords no coverage for the injuries sustained by Kevin Davenport on December
Dec. Received a bill from Universal Utilities for the month of December, $ Payment is due in days.
Dec. Equipment rental fees earned during the second half of December amounted to $ of which $ was received in cash.
Data for Adjusting Entries in Year
a The advance payment of rent on December covered a period of three months.
b The annual interest rate on the note payable to RentIt is percent.
c The rental equipment is being depreciated by the straightline method over a period of eight years. Any salvage value at the end of its useful life is expected to be negligible and immaterial.
d Office supplies on hand at December are estimated at $
e During December, the company earned $ of the rental fees paid in advance by McNamer Construction Company on December
f As of December six days rent on the backhoe rented to Mission Landscaping on December has been earned. g Salaries earned by employees since the last payroll date December amounted to $ at monthend.
h It is estimated that the company is subject to an income tax rate of percent of profit before income taxes total revenue minus all expenses other than income taxes These taxes will be payable in Year
Award: points Prepare an afterclosing trial balance as of December Round your final answers to the nearest whole dollar.
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