Dec. $1$ Issued to John and Patty Driver $22,000$ new shares in exchange for a total of $$220,000$ cash.

Dec. $1$ Purchased for $$230,400$ all of the equipment formerly owned by Rent$-$It$.$ Paid $$138,000$ cash and issued a $1-$year note payable for $$92,400.$ The note, plus all $12$ months of accrued interest, are due November $30,$ Year $2.$

Dec. $1$ Paid $$11,400$ to Shapiro Realty as three months$$ advance rent on the rental yard and office formerly occupied by Rent$-$It$.$

Dec. $4$ Purchased office supplies on account from Modern Office Co$.,$ $$1,300.$ Payment due in $30$ days. $($These supplies are expected to last for several months; debit the Office Supplies asset account.$)$

Dec. $8$ Received $$8,900$ cash as advance payment on equipment rental from McNamer Construction Company. $($Credit Unearned Rental Fees.$)$

Dec. $12$ Paid salaries of $$4,700$ for the first two weeks in December.

Dec. $15$ Excluding the McNamer advance, equipment rental fees earned during the first $15$ days of December amounted to $$18,200,$ of which $$12,600$ was received in cash.

Dec. $17$ Purchased on account from Earth Movers, Inc., $$900$ in parts needed to perform basic maintenance on a rental tractor. Payment is due in $10$ days.

Dec. $23$ Collected $$2,900$ of the accounts receivable recorded on December $15.$

Dec. $26$ Rented a backhoe to Mission Landscaping at a price of $$260$ 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 biweekly salaries, $$4,700.$

Dec. $27$ Paid the account payable to Earth Movers, Inc., $$900.$

Dec. $28$ Declared a dividend of $10$ cents per share, payable on January $15,$ Year $2.$

Dec. $29$ Susquehanna Equipment Rentals was named, along with Mission Landscaping and Collier Construction, as a co$-$defendant in a $$25,000$ lawsuit filed on behalf of Kevin Davenport. Mission Landscaping had left the rented backhoe in a fenced construction site owned by Collier Construction. After working hours on December $26,$ Davenport had climbed the fence to play on parked construction equipment. While playing on the backhoe, he fell and broke his arm. The extent of the company$$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. $29$ Purchased a $12-$month public liability insurance policy for $$8,400.$ This policy protects the company against liability for injuries and property damage caused by its equipment. However, the policy goes into effect on January $1,$ Year $2,$ and affords no coverage for the injuries sustained by Kevin Davenport on December $26.$

Dec. $31$ Received a bill from Universal Utilities for the month of December, $$670.$ Payment is due in $30$ days.

Dec. $31$ Equipment rental fees earned during the second half of December amounted to $$20,200,$ of which $$15,700$ was received in cash.

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 $$660.$

During December, the company earned $$4,000$ 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 $$1,100$ at month$-$end.

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

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