On 1 December 2020, John, Pat, David formed a corporation called JPD Equipment Rentals, which specializes in renting equipment. The business transactions for December are shown below: 1 Dec Issued shares to shareholders 20,000 new shares in exchange for $200,000 cash. 1 Purchased rental equipment of $240,000. A cash payment of $140,000 was made and a note payable was issued for the balance. 1 Paid $12,000 to Shapiro Realty as three months' advance rent on rental yard and office. 1 Purchased a 12-month public liability insurance for $9,600. The policy will go into effect immediately. 4 Office supplies were purchased from Office World for $1,000 cash. 8 Received $8,000 cash as advance payment on equipment rental from McNamer Construction Company. 12 Paid Salaries for the first two weeks in December, $5,200. 15 Billed customers for Equipment rental fees earned during the first 15 days of December amounted to $18,000, of which $12,000 received in cash and the rest is due next month. 17 Purchased on account from Earth Movers limited, $600 in parts needed to repair a rental tractor. Payment is due in 10 days. (Debit an expense account.) 23 Collected $2,000 of accounts receivable recorded on 15 December. 26 Paid Salaries for the third and fourth weeks in December, $5,200. 27 Paid the account payable to Earth Movers limited, $600. 28 Declared dividend of 10 cents per share, payable in January 2021. 31 Received a bill for utilities for the December, $700. Payment is due in 30 days. 31 Billed customers for Equipment rental fees earned during the second half of December amounted to $20,000, of which $15,600 received in cash and the rest is due next month. 31 Collected remaining accounts receivable on 15 December. Share capital Retained earnings Dividends Rental fees earned Salaries expense Repair & Maintenance expense Insurance Expense The company uses the following accounts: Cash Accounts receivable Prepaid rent Unexpired insurance Office supplies Rental equipment Accumulated Depreciation: rental equipment Accounts payable Unearned rental fees Dividends payable Interest payable Salaries payable Income taxes payable Notes Payable Utilities expense Rent expense Interest expense Depreciation expense Office supplies expense Income taxes expense Data for adjusting entries 1. The advance payment of rent on 1 December covered a period of 3 months from December 2020 to February 2021. 2. Annual interest rate on the note payable on 1 December is 6 percent. 3. The rental equipment's estimated useful life was eight years. 4. Office Supplies on hand at 31 December amount to $600. 5. The 12-month public-liability insurance paid on 1 December is covering 1 December 2020 to 30 November 2021. 6. During December, the company earned $4,000 of the rental fees paid in advance by McNamer Construction Company. 7. As at 31 December, 6 days rent on equipment rented to Mission Landscaping totaling $1,200 has been earned, but not yet recorded. Payment will be received when Mission returns the equipment to the company in January 2021. 8. Salaries earned by employees since the last payment date (26 December) amounted to $1,400 at month-end. 9. The company's CPA estimates that the company is subject to an income tax rate of 40 percent of profit before tax. Instructions a. Prepare journal entries for each transaction in December. (No explanation needed) b. Post the journal entries to the T-accounts and prepare the unadjusted trial balance dated 31 December 2020. c. Prepare the necessary adjusting entries for each of the numbered paragraphs at the data for adjusting entries. d. Prepare the adjusted trial balance dated 31 December 2020. On 1 December 2020, John, Pat, David formed a corporation called JPD Equipment Rentals, which specializes in renting equipment. The business transactions for December are shown below: 1 Dec Issued shares to shareholders 20,000 new shares in exchange for $200,000 cash. 1 Purchased rental equipment of $240,000. A cash payment of $140,000 was made and a note payable was issued for the balance. 1 Paid $12,000 to Shapiro Realty as three months' advance rent on rental yard and office. 1 Purchased a 12-month public liability insurance for $9,600. The policy will go into effect immediately. 4 Office supplies were purchased from Office World for $1,000 cash. 8 Received $8,000 cash as advance payment on equipment rental from McNamer Construction Company. 12 Paid Salaries for the first two weeks in December, $5,200. 15 Billed customers for Equipment rental fees earned during the first 15 days of December amounted to $18,000, of which $12,000 received in cash and the rest is due next month. 17 Purchased on account from Earth Movers limited, $600 in parts needed to repair a rental tractor. Payment is due in 10 days. (Debit an expense account.) 23 Collected $2,000 of accounts receivable recorded on 15 December. 26 Paid Salaries for the third and fourth weeks in December, $5,200. 27 Paid the account payable to Earth Movers limited, $600. 28 Declared dividend of 10 cents per share, payable in January 2021. 31 Received a bill for utilities for the December, $700. Payment is due in 30 days. 31 Billed customers for Equipment rental fees earned during the second half of December amounted to $20,000, of which $15,600 received in cash and the rest is due next month. 31 Collected remaining accounts receivable on 15 December. Share capital Retained earnings Dividends Rental fees earned Salaries expense Repair & Maintenance expense Insurance Expense The company uses the following accounts: Cash Accounts receivable Prepaid rent Unexpired insurance Office supplies Rental equipment Accumulated Depreciation: rental equipment Accounts payable Unearned rental fees Dividends payable Interest payable Salaries payable Income taxes payable Notes Payable Utilities expense Rent expense Interest expense Depreciation expense Office supplies expense Income taxes expense Data for adjusting entries 1. The advance payment of rent on 1 December covered a period of 3 months from December 2020 to February 2021. 2. Annual interest rate on the note payable on 1 December is 6 percent. 3. The rental equipment's estimated useful life was eight years. 4. Office Supplies on hand at 31 December amount to $600. 5. The 12-month public-liability insurance paid on 1 December is covering 1 December 2020 to 30 November 2021. 6. During December, the company earned $4,000 of the rental fees paid in advance by McNamer Construction Company. 7. As at 31 December, 6 days rent on equipment rented to Mission Landscaping totaling $1,200 has been earned, but not yet recorded. Payment will be received when Mission returns the equipment to the company in January 2021. 8. Salaries earned by employees since the last payment date (26 December) amounted to $1,400 at month-end. 9. The company's CPA estimates that the company is subject to an income tax rate of 40 percent of profit before tax. Instructions a. Prepare journal entries for each transaction in December. (No explanation needed) b. Post the journal entries to the T-accounts and prepare the unadjusted trial balance dated 31 December 2020. c. Prepare the necessary adjusting entries for each of the numbered paragraphs at the data for adjusting entries. d. Prepare the adjusted trial balance dated 31 December 2020