Dec. 1 Issued to John and Patty Driver 20,000 new shares in exchange for a total of $200,000 cash. 1 Purchased for $240,000 all of the equipment formerly owned by Rent-It. Paid $140,000 cash and issued a one-year note payable for $100,000. The notes plus all 12 months of accrued interest, are due November 30, 2013. should be 2014 On 1 December 2013, 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 Rent-lt, an equipment rental company that was going out of business. The newly formed company uses the following accounts: Cash Accounts Receivable Prepaid Rent Unexpired Insurance Office Supplies Rental Equipment Accumulated Depreciation: Rental Equipment Notes Payable Accounts Payable Interest Payable Salaries Payable Dividends Payable Unearned Rental Fees Income Taxes Payable Share Capital Retained Earnings Dividends Income Summary Rental Fees Earned Salaries Expense Maintenance Expense Utilities Expense Rent Expense Office Supplies Expense Depreciation Expense Interest Expense Income Taxes Expense The corporation performs adjusting entries monthly. Closing entries are performed annually on 31 December. During December, the corporation entered into the following transactions: Dec. 1 Issued to John and Patty Driver 30,000 new shares in exchange for a total of $300,000 cash. Dec. 1 Purchased for $240,000 all of the equipment formerly owned by Rent-It. Paid $133,000 cash and issued a one-year note payable for $107,000. The notes, plus all 12-months of accrued interest, are due 30 November 2013. Dec. 1 Paid $10,500 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., $1,200. Payment due in 30 days. (These supplies are expected to last for several months; debit the Office Supplies asset account.) Dec. 8 Received $8,500 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned Rental Fees.) Dec. 12 Paid salaries for the first two weeks in December, $4,500. Dec. 15 Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to $18,900, of which $12,600 was received in cash. Dec. 17 Purchased on account from Earth Movers Limited, $700 in parts needed to repair a rental tractor. (Debit an expense account.) Payment is due in 10 days. Dec. 23 Collected $2,400 of the accounts receivable recorded on 15 December. Dec. 26 Rented a backhoe to Mission Landscaping at a price of $280 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, $4,500. Dec. 27 Paid the account payable to Earth Movers Limited, $700. Dec. 28 Declared a dividend of 10 cents per share, payable on 15 January 2014. Dec. 29 Susquehanna Equipment Rentals was named, along with Mission Landscaping and Collier Construction, as a co-defendant in a $26,000 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 26 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. 29 Purchased a 12-month public-liability insurance policy for $8,760. This policy protects the company against liability for injuries and property damage caused by its equipment. However, the policy goes into effect on 1 January 2014, and affords no coverage for the injuries sustained by Kevin Davenport on 26 December. Dec. 31 Received a bill from Universal Utilities for the month of December, $610. Payment is due in 30 days. Dec. 31 Equipment rental fees earned during the second half of December amounted to $20,900, of which $15,900 was received in cash. Data for Adjusting Entries a. The advance payment of rent on 1 December covered a period of three months. b. The annual interest rate on the note payable to Rent-It is 6 percent. c. The rental equipment is being depreciated by the straight-line method over a period of eight years. d. Office supplies on hand at 31 December are estimated at $610. e. During December, the company earned $4,600 of the rental fees paid in advance by McNamer Construction Co. on 8 December. f. As of 31 December, six days' rent on the backhoe rented to Mission Landscaping on 26 December has been earned. g. Salaries earned by employees since the last payroll date (26 December) amounted to $1,100 at month- end. h. It is estimated that the company is subject to an income tax rate of 40 percent of profit before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable in 2014. Journalize the December transactions. Do not record adjusting entries at this point. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Date General Journal Debit Credit 300000 Dec. 1 Cash Share Capital 1 Rental equipment Cash Notes payable 1 Prepaid rent Cash 4 Office supplies Accounts payable 300000 240000 133000 107000 10500 10500 1200 1200 8 Cash 8500 Unearned rental fees 8500 12 Salaries expense Cash 4500 4500 15 Accounts receivable 6300 Cash 12600 Rental fees earned 18900 17 Maintenance expense Cash 700 700 23 23 Cash Accounts receivable 26 No journal entry required No journal entry required 26 Salaries expense Cash 27 Accounts payable Cash 28 Dividends Dividends payable 29 No journal entry required No journal entry required 29 Unexpired insurance Cash 31 Utilities expense Accounts payable 31 Accounts receivable Cash Rental fees earned 2400 0 2400 0 4500 4500 700 700 Prepare the necessary adjusting entries for December. (Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the "$" sign in your response.) Date Dec. 31 General Journal (Click to select) (Click to select) 31 (Click to select) (Click to select) 31 (Click to select) (Click to select) 31 (Click to select) (Click to select) 31 (Click to select) (Click to select) 31 (Click to select) (Click to select) 31 (Click to select) (Click to select) 31 (Click to select) (Click to select) Debit Credit Prepare closing entries and post to ledger accounts. (Do not round intermediate calculations. Omit the "$" sign in your response.) Date General Journal Dec. 31 (Click to select) (Click to select) 31 (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) 31 (Click to select) (Click to select) 31 (Click to select) (Click to select) Debit Credit Post the entries into the following ledger accounts. (Record the transactions in the given order. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Date Debit Dec. 1 1 1 8 12 15 23 26 27 29 31 GENERAL LEDGER Cash Credit Balance Accounts Receivable Date Dec. 15 Debit Credit Balance 23 31 31 Prepaid Rent Date Debit Credit Balance Dec. 1 31 Date Dec. 29 Debit Unexpired Insurance Credit Balance Office Supplies Date Debit Credit Balance Dec. 4 31 Date Debit Rental Equipment Credit Dec. 1 Accumulated Depreciation: Rental Equipment Date Debit Dec. 31 Credit Balance Balance Notes Payable Date Dec. 1 Debit Credit Balance Date Debit Accounts Payable Credit Balance Dec. 4 17 27 31 Date Debit Interest Payable Credit Balance Dec. 31 Date Dec. 31 Debit Salaries Payable Credit Balance Date Dec. 28 Debit Dividends Payable Credit Balance Date Debit Unearned Rental Fees Credit Balance Dec. 8 31 Date Debit Income Taxes Payable Credit Balance Dec. 31 Share Capital Date Debit Credit Balance Dec. 1 Date Debit Retained Earnings Credit Balance Dec. 31 31 Dividends Date Debit Credit Balance Dec. 28 31 25 Income Summary Date Dec. 31 Debit Credit Balance 31 31 Rental Fees Earned Date Debit Credit Balance Dec. 15 31 31 31 31 Date Debit Salaries Expense Credit Balance Dec. 12 26 31 31 Date Debit Maintenance Expense Credit Balance Dec. 17 30 Date Debit Utilities Expense Credit Balance Dec. 31 31 Date Debit Dec. 31 31 Rent Expense Credit Balance Office Supplies Expense Date Debit Credit Balance Dec. 31 31 Date Debit Depreciation Expense Credit Balance Dec. 31 31 Date Debit Interest Expense Credit Balance Dec. 31 31 Date Debit Dec. 31 31 Income Taxes Expense Credit Balance Prepare an income statement for the year ended December 31. (Input all amounts as positive values. Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the "$" sign in your response.) SUSQUEHANNA EQUIPMENT RENTALS Income Statement For the Year Ended December 31, 2013 Revenue: (Click to select) Expenses (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) $ Prepare a statement of changes in equity for the year ended December 31. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) SUSQUEHANNA EQUIPMENT RENTALS Statement of Changes in Equity For the Year Ended December 31, 2013 Retained earnings, December 1, 2013 (Click to select) Subtotal (Click to select) Retained earnings, December 31, 2013 Prepare a statement of financial position (in report form) as at December 31. (Input all amounts as positive values. Be sure to list the assets and liabilities in order of their liquidity. Omit the "$" sign in your response.) Assets (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) Total Assets Liabilities & Equity Liabilities: (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) Total Liabilities SUSQUEHANNA EQUIPMENT RENTALS Statement of financial position December 31, 2013 $ $ $ $ Shareholders' equity: (Click to select) (Click to select) Total Shareholders' Equity Total Liabilities and Shareholders' Equity EA EA EA Prepare an after-closing trial balance as of December 31. (The items in the Trial Balance should be grouped as follows: Assets (in order of their liquidity), Liabilities (in order of their liquidity) and Equity. Omit the "$" sign in your response.) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) Totals SUSQUEHANNA EQUIPMENT RENTALS After-Closing Trial Balance December 31, 2013 Debit Credit $ $ $