Data for Adjusting Entries in Year $1$

The advance payment of rent on December $1$ covered a period of three months.

The annual interest rate on the note payable to Rent$-$It is $6$ percent.

The rental equipment is being depreciated by the straight$-$line method over a period of eight years. Any salvage value at the end of its useful life is expected to be negligible and immaterial.

Office supplies on hand at December $31$ are estimated at $$720.$

During December, the company earned $$4,440$ of the rental fees paid in advance by McNamer Construction Company on December $8.$

As of December $31,$ six days$$ rent on the backhoe rented to Mission Landscaping on December $26$ has been earned.

Salaries earned by employees since the last payroll date $($December $26)$ amounted to $$1,680$ at month$-$end.

It is estimated that the company is subject to a combined federal and state income tax rate of $40$ percent of income before income taxes $($total revenue minus all expenses other than income taxes$).$ These taxes will be payable in Year $2.$

Comprehensive Problem $1($Static$)$ Part $1$

Required:

$1-$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.