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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

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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 Recevable 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 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. Pald $135,000 cash and Issued a one-year note payable for $95,400. The notes, plus all 12-months of accrued Interest, are due 30 November 2013 Dec 1 Paid $9,900 to Shapiro Realty as three months' advance rent on the rental yard and office formerly occupled by Rent-It. Dec. 4 Purchased office supplies on account from Modern Office Co., $1,500. Payment due in 30 days. (These supplies are expected to last for several months; debit the Office Supplies asset account.) Dec. 8 Received $8,800 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, $4,300. Dec 15 Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to $18,400, of which $12,500 was received in cash. Dec 17 Purchased on account from Earth Movers Limited, 5700 in parts needed to repair a rental tractor. (Debit an expense account) Payment is due in 10 days. Dec 23 Collected $2.500 of the accounts receivable recorded on 15 December. Dec 26 Rented a backhoe to Mission Landscaping at a price of $270 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 salarles. $4,300. 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 $22,000 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 $8.640. 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 $20,600, of which $16,200 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 $670. e. During December, the company earned $4,300 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 $2,000 at month- end. h. It is estimated that the company is subject to an Income tax rate of 40 percent of profit before Income taxes (total revenue minus all expenses other than Income taxes). These taxes will be payable in 2014. Journalize the December transactions. Do not record adjusting entries at this point. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Date Dec. 1 Credit General Journal Cash Share Capital Debit 22000 22000 1 230400 Rental equipment Cash Notes payable 135000 95400 1 9900 Prepaid rent Cash 9900 4 1500 Office supplies Accounts payable 1500 8 8800 Cash Uneamed rental fees 8800 12 4300 Salaries expense Cash 4300 15 Cash Accounts receivable Rental fees earned > > 12500 5900 18400 17 700 Maintenance expense Accounts payable 700 23 2500 Cash Accounts receivable 2500 26 Accounts payable Accounts receivable 26 4300 Salaries expense Cash 4300 27 Accounts payable Cash 700 700 28 2200 Dividends Notes payable 2200 29 No journal entry required No journal entry required 0 29 Unexpired insurance Cash 8640 8640 31 610 Utilities expense Accounts payable 610 31 Cash Accounts receivable Rental fees earned 16200 4400 20600 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.) General Journal Debit Credit Date Dec. 31 31 > Assets (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) > > > Total Liabilities EA 100 TIIN Shareholders' equity: (Click to select) (Click to select) $ Total Shareholders' Equity CA Total Liabilities and Shareholders' Equity $ $ 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 EA 100 TIIN Shareholders' equity: (Click to select) (Click to select) $ Total Shareholders' Equity CA Total Liabilities and Shareholders' Equity $

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