Reage a Desde hand Pyr20.00 f $200.000 Des Purchased for 240.000 the 5140.000 cash and issued a one- formerly owned by Re 5100.000 Theme d Dec 1 Paid $12000 S R ya dando o ped by Rent Des & Purchase office on One Co. 51.000 Payment due in 30 days (These were so m deb the Office Supplies c unt) Des Received .000 cash as a Memor Construction Company Credit Uncamentos Dung e 15 Decemb D . Des 28 Dec vided of 10 y 15.000 recom m e p comporte m end by ony 220 and ordene Becember 28 d e Page 2 by M r Construction Comory on December As of December 31, on the b e d and You were perform the other 2. Prepare the necessary (14 Mar Prepare an income and b e ing o ne This is a comprehensive accounting cycle problem. Please read the following carefully and answer all questions: On December 1, 2019, 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 Rentan equipment rental company that was going out of business. During December 2019, the corporation entered into the following transactions: Dec. 1 Issued to John and Patty Driver 20,000 shares of capital stock in exchange for a total of $200.000 cash Dec. 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 note, plus all 12 months of accrued interest are due November 30, 2020 Dec. 1 Paid $12,000 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.. $1,000 Payment due in 30 days. (These supplies are expected to last for several months debit the Office Supplies asset account.) Dec. 8 Received $8,000 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Uneamed Rental Fees) Dec. 12 Paid salaries for the first two weeks in December, $5,200. Dec. 15 Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to $18,000, of which $12,000 was received in cash. Dec. 17 Purchased on account from Earth Movers, Inc. $600 in parts needed to repair a rental tractor. (Debit an expense account.) Payment is due in 10 days Dec. 23 Collected $2,000 of the accounts receivable recorded on December 15. Dec. 26 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 or three weeks Dec. 26 Paid biweekly salaries, $5,200. Dec. 27 Paid the account payable to Earth Movers, Inc., $600. Dec. 28 Declared a dividend of 10 cents per share, payable on January 15, 2020 Dec. 29 Purchased a 12-month public liability insurance policy for $9.600. This policy protects the company against liability for injuries and property damage caused by its equipment. However, the policy goes into effect on January 1, 2020, and affords no coverage for the injuries sustained by Kevin Davenport on December 26. Page 2 of 3 Dec. 31 Received a bill from Universal Utilities for the month of December, $700. Payment is due in 30 days. Dec. 31 Equipment rental fees earned during the second half of December amounted to $20,000, of which $15,600 was received in cash. Data for Adjusting Entries on December 31, 2019: (a) The advance payment of rent on December 1 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 December 31 are estimated at $600. (e) During December, the company earned $3,700 of the rental fees paid in advance by McNamer Construction Company on December 8. on December 26 has been earned. (9) Salaries earned by employees since the last payroll date (December 26) amounted to $1,400 at month-end. You are required to perform the following steps of the accounting cycle for the month of December, 2019: 1. Journalize the transactions from December 1 to December 31. (33 Marks) 2. Prepare the necessary adjusting entries for (a) to (g). (14 Marks)
