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On December $1,$ Year $1,$ John and Patty Drlver 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.

The corporation performs adjusting entrles monthly. Closing entrles are performed annually on December $31.$ During

December of its first year of operations, the corporation entered into the following transactions.

Dec. $1$ Issued to John and Patty Driver $29,000$ shares of capital stock in exchange for a total of $$290,$ee$0$ cash.

Dec. $1$ Purchased for $$259,200$ all of the equipment formerly owned by Rent$-$It$.$ Paid $$133,0$ee cash and issued a $1-$year

note payable for $$126,200.$ The note, plus all $12$ months of accrued interest, are due Novenber $30,$ Year $2.$

Dec. $1$ Paid $$11,100$ 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$.,$ $$1,600.$ Payment due in $30$ days. $($These supplies are

expected to last for several months; debit the office Supplies asset account.$)$

Dec. $8$ Received $$8,600$ cash as advance payment on equipment rental from McNaner Construction Company. $($Credit Unearned

Rental Fees.$)$

Dec. $12$ Paid salaries of $$4,600$ for the first two weeks in Decenber.

Dec. $15$ Excluding the McNamer advance, equipnent rental fees earned during the first $15$ days of December anounted to

$$18,300,$ of which $$12,500$ was received in cash.

Dec. $17$ Purchased on account fron Earth Movers, Inc., $$800$ in parts needed to perform basic maintenance on a rental

tractor. Payment is due in $10$ days.

Dec. $23$ Collected $$2,900$ of the accounts receivable recorded on December $15.$

Dec. $26$ Rented a backhoe to Mission Landscaping at a price of $$350$ 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, $$4,6e0.$

Dec. $27$ Paid the account payable to Earth Movers, Inc., $$880.$

Dec. $28$ Declared a dividend of $10$ cents per share, payable on January $15,$ Year $2.$

Dec. $29$ Susquehanna Equipment Rentals was named, along with Mission Landscaping and Collier Construction, as a co$-$

defendant in a $$29,$ e$9$e 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 December $26,$

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 deternined 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 $$9,249.$ This policy protects the company against

liability for injuries and property damage caused by its equipment. However, the policy goes into effect on

January $1,$ Year $2,$ and affords no coverage for the injuries sustained by Kevin Davenport on December $26.$

Dec. $31$ Received a bill from Universal utilities for the month of December, $$620.$ Paynent is due in $30$ days.

Dec. $31$ Equipment rental fees earned during the second half of Decenber anounted to $$20,800,$ of which $$16,000$ was

received in cash.

Data for Adjusting Entrles in Year $1$

a$.$ The advance payment of rent on December $1$ covered a perlod of three months.

b$.$ The annual interest rate on the note payable to Rent$-$lt is $6$ percent.

c$.$ The rental equipment is belng depreclated by the stralght$-$line method over a perlod of elght years. Any salvage value

at the end of Its useful life is expected to be negligible and Immaterlal.