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signment 2 Questions 1-6 (of 6) 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-It, 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 Salarles 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 26,000 new shares in exchange for a total of $260,000 cash Dec. 1 Purchased for $249,600 all of the equipment formerly owned by Rent-it Paid $136,000 cash and issued a one year note payable for $113,600. The notes, plus all 12 months of accrued Interest, are due 30 November 2013 Dec. 1 Pald $10,800 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 $8,700 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned Rental Fees.) Dec. 12 Pald salaries for the first two weeks in December. $5,000. Dec. 15 Excluding the McNamer advance equipment rental fees earned during the first 15 days of December amounted to $18,400, of which $12,200 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 $2,600 of the accounts receivable recorded on 15 December Dec. 26 Rented a backhoe to Mission Landscaping at a price of $300 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 blweekly salaries, $5.000, Dec. 27 Pald 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 $21,000 lawsult 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-Hability Insurance policy for $8,520. 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 $620. Payment is due in 30 days Dec. 31 Equipment rental fees earned during the second half of December amounted to $20,200, of which $16.500 was recelved in cash. 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, $620. Payment is due in 30 days. Dec. 31 Equipment rental fees earned during the second half of December amounted to $20,200, of which $16.500 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 $680. e. During December, the company earned $4.300 of the rental fees paid in advance by McNamer Construction Co.on 8 December. 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 $1,800 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. value: 45.00 points Journalize the December transactions. Do not record adjusting entries at this point. (In cases where no 31 23 26 29 29 31 28 [ >