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Semester 2019/2020 GT00103 GROUP ASSIGNMENT PROBLEM 1 A Comprehensive Accounting Cycle Problem On 1 December 2009, Yumna Mikayla formed a corporation called Sunshine 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. The newly formed company uses the following accounts: Cash Income Taxes Payable Accounts Receivable Share Capital Prepaid Rent Retained Earnings Unexpired Insurance Dividends Office Supplies Income Summary Rental Equipment Rental Fees Earned Accumulated Depreciation: Salaries Expense Rental Equipment Maintenance Expense Notes Payable Utilities Expense Accounts Payable Rent Expense Interest Payable Office Supplies Expense Salaries Payable Depreciation Expense Dividends Payable Interest Expense Unearned Rental Fees 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: 1 Dec. Issued to Yumna Mikayla 20,000 new shares in exchange for a total of $200,000 tash. 1 Dec. Purchased for $240,000 all of the equipment formerly owned by Rent-it. Pald $140,000 cash and issued a one-year note payable for $100,000 1 Dec. Paid $12,000 to Shapiro Realty as three months' advance rent on the rental yard and office formerly occupied by Rent-It. 4 Det. Purchased office supplies on account from Modern Office Co., 51,000. Payment due in 20 days. These supplies are expected to last for several months; debit the Office Supplies asset account.) 8 Dec. Received $8,000 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned Rental Fees.) 12 Dec. Paid salaries for the first two weeks in December, $5,200. 15 Dec. Excluding the McNamer advance, equipment rental fees eamed during the first 15 days of December amounted to $18,000, of which $12,000 was received in cash 17 Dec. Purchased on account from Carth Movers Limited, $600 in parts needed to repair a rental tractor (Debit an expense account) Payment is due in 10 days. Semester2 2019/2020 21 Dec. Collected $2,000 of the accounts receivable recorded on 15 December 23 Dec. Rented a backhoe to Mission Landscaping at a price of $250 per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two to three weeks. 26 Dec. Paid biweekly salaries, 55,200, 27 Dec. Paid the account payable to Earth Movers Limited, $600. 28 Dec. Declared a dividend of 10 cents per share, payable on 15 January 2010, 29 Dec. Eureka 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, Alter 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. INote: This event does not require a journal entry at this time, but may require disclosure in notes accompanying the statements.) 29 Dec. Purchased a 12-month public-Hability insurance policy for $9,600. This policy protects the company against liability for injuries and property damaged caused by no its equipment. However, the policy goes into effect on 1 January 2010, and affords no coverage for the injuries sustained by Kevin Davenport on 26 December. 31 Dec. Received a bill from Universal Utilities for the month of December, 5700 Payment is due in 30 days 31 Dec Equipment rental fees earned during the second half of December amounted to $20.000, of which $15,600 was received in cash. Semester2 2019/2020 21 Dec. Collected $2,000 of the accounts receivable recorded on 15 December 23 Dec. Rented a backhoe to Mission Landscaping at a price of $250 per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two to three weeks. 26 Dec. Paid biweekly salaries, 55,200, 27 Dec. Paid the account payable to Earth Movers Limited, $600. 28 Dec. Declared a dividend of 10 cents per share, payable on 15 January 2010, 29 Dec. Eureka 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, Alter 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. INote: This event does not require a journal entry at this time, but may require disclosure in notes accompanying the statements.) 29 Dec. Purchased a 12-month public-Hability insurance policy for $9,600. This policy protects the company against liability for injuries and property damaged caused by no its equipment. However, the policy goes into effect on 1 January 2010, and affords no coverage for the injuries sustained by Kevin Davenport on 26 December. 31 Dec. Received a bill from Universal Utilities for the month of December, 5700 Payment is due in 30 days 31 Dec Equipment rental fees earned during the second half of December amounted to $20.000, of which $15,600 was received in cash. Semester 2019/2020 GT00103 GROUP ASSIGNMENT PROBLEM 1 A Comprehensive Accounting Cycle Problem On 1 December 2009, Yumna Mikayla formed a corporation called Sunshine 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. The newly formed company uses the following accounts: Cash Income Taxes Payable Accounts Receivable Share Capital Prepaid Rent Retained Earnings Unexpired Insurance Dividends Office Supplies Income Summary Rental Equipment Rental Fees Earned Accumulated Depreciation: Salaries Expense Rental Equipment Maintenance Expense Notes Payable Utilities Expense Accounts Payable Rent Expense Interest Payable Office Supplies Expense Salaries Payable Depreciation Expense Dividends Payable Interest Expense Unearned Rental Fees 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: 1 Dec. Issued to Yumna Mikayla 20,000 new shares in exchange for a total of $200,000 tash. 1 Dec. Purchased for $240,000 all of the equipment formerly owned by Rent-it. Pald $140,000 cash and issued a one-year note payable for $100,000 1 Dec. Paid $12,000 to Shapiro Realty as three months' advance rent on the rental yard and office formerly occupied by Rent-It. 4 Det. Purchased office supplies on account from Modern Office Co., 51,000. Payment due in 20 days. These supplies are expected to last for several months; debit the Office Supplies asset account.) 8 Dec. Received $8,000 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned Rental Fees.) 12 Dec. Paid salaries for the first two weeks in December, $5,200. 15 Dec. Excluding the McNamer advance, equipment rental fees eamed during the first 15 days of December amounted to $18,000, of which $12,000 was received in cash 17 Dec. Purchased on account from Carth Movers Limited, $600 in parts needed to repair a rental tractor (Debit an expense account) Payment is due in 10 days. Semester2 2019/2020 21 Dec. Collected $2,000 of the accounts receivable recorded on 15 December 23 Dec. Rented a backhoe to Mission Landscaping at a price of $250 per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two to three weeks. 26 Dec. Paid biweekly salaries, 55,200, 27 Dec. Paid the account payable to Earth Movers Limited, $600. 28 Dec. Declared a dividend of 10 cents per share, payable on 15 January 2010, 29 Dec. Eureka 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, Alter 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. INote: This event does not require a journal entry at this time, but may require disclosure in notes accompanying the statements.) 29 Dec. Purchased a 12-month public-Hability insurance policy for $9,600. This policy protects the company against liability for injuries and property damaged caused by no its equipment. However, the policy goes into effect on 1 January 2010, and affords no coverage for the injuries sustained by Kevin Davenport on 26 December. 31 Dec. Received a bill from Universal Utilities for the month of December, 5700 Payment is due in 30 days 31 Dec Equipment rental fees earned during the second half of December amounted to $20.000, of which $15,600 was received in cash. Semester2 2019/2020 21 Dec. Collected $2,000 of the accounts receivable recorded on 15 December 23 Dec. Rented a backhoe to Mission Landscaping at a price of $250 per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two to three weeks. 26 Dec. Paid biweekly salaries, 55,200, 27 Dec. Paid the account payable to Earth Movers Limited, $600. 28 Dec. Declared a dividend of 10 cents per share, payable on 15 January 2010, 29 Dec. Eureka 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, Alter 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. INote: This event does not require a journal entry at this time, but may require disclosure in notes accompanying the statements.) 29 Dec. Purchased a 12-month public-Hability insurance policy for $9,600. This policy protects the company against liability for injuries and property damaged caused by no its equipment. However, the policy goes into effect on 1 January 2010, and affords no coverage for the injuries sustained by Kevin Davenport on 26 December. 31 Dec. Received a bill from Universal Utilities for the month of December, 5700 Payment is due in 30 days 31 Dec Equipment rental fees earned during the second half of December amounted to $20.000, of which $15,600 was received in cash