Required information The following information applies to the questions displayed below.] On December 1, Year 1, 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 f Rent-lt, an equipment rental company that was going out of business. The newly formed company uses the following accounts. Cash Capital Stock Divid arnings Income Summary Prenas ceivable Unexpired Insurance ed eeries Funense PPies Ren Accumulated Depreciation: Notes B uipment Rent Expense Accounts Payable intereet Payable IEice suppiies Expense Dividends Payable Interest Expense Income Taxes Expense eatned Kental Fees Income Taxea Payable The corporation performs adjusting entries monthly. Closing entries are performed annually on December 31. During December, the corporation entered into the following transactions. Dec. 1 Iasued to John and Patty Driver 26,000 ahares or capital stock in exchange for a total of $260,000 cash. Dec. 1 issued a 1-year note payable for $157,000. The note, plus all 12 monthe of accrued interest, are due November 30, Year 2 Dec. 1 ied by Bent-It piro Realty as three months advance rent on the rental vard and oftice formerly Dea. 4 Purchased office supplies on account from Modern office Co., $1,700. Payment due in 30 days (These 8 Bcceived SB.800 Caah aa advanoce paYment on cauirment rental fr om McNamer Conatruction Company. Dec. (Credit Unearned Rental Fees,) Dea.12 Paid salaries for the first two weeks in December, $4,500 Dea.15 during the firat 15 days of December amounted $18 600 ot vhich $12 400 wa xeceired in cash Dec.17 Purchased on account from Earth Movers, Inc., s800 in parts needed to repair rental tractor. Dea 23 Co11ected $2.500 of the accounta receivable recorded on December 15. Dec.26 Rented a backhoe to Miss1on Landacaping at a price of $250 per day, to be paid when the backhoe ia Dec. 26 Paid bivekl .l.ri e ects to keep the backhoe for about to or three weeks. Dec.27 Paid the account payable to Earth Movers, Ine., s800. Pee ne u baREKtrmen Bentals M namedalong vith M1aaion Landscaping and Col1ier Construction. as a co-defendant in a $22,000 1lawsuit filed on behalf of Kevin Davenport. Mission Lands caping had rking houre 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 Note: This event does not remire a iournal entry et tthis time. hur may remire disclosure in notes accompanying the statements.) Dec.29 dwgany ninst 1icility for iniuries and ronerty dem used bx its cmuirment HeereT the nolic goes into effect on January 1, Year 2, and affords no coverage for the injuries sustained by Kevin Beetred a k111 From to 1reraal te1111e tor the month of December, $670. Payment is due in 30 days. Dec.31 E . earned during the second half of December amounted to $20,200, of which Data for Adjusting Entries 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-lt 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 $610. e. During December, the company eaned $4,500 of the rental fees paid in advance by McNamer Construction Company f. As of December 31, six days' rent on the backhoe rented to Mission Landscaping on December 26 has been earned. a. Salaries earned by employees since the last payroll date (December 26) amounted to $1.500 at month-end. h. It is estimated that the company is subject to a combined federal and state income tax rate of 40 percent of income before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable Year 2 1-b Prenare the adiusting ontries for Decemddjusting entries at this point 1-c. Prepare closing entries and post to ledger accounts