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 of Rent-It, an equipment rental company that was going out of business. The newly formed company uses the following accounts. Capital Stock Retained tarnings Dividenda Income Summary Rental Tees Earned salaries Expense Cash Accounts Receivable Prepaid Rent Unexpired Insurance Office Supplies Rental equipment Accumulated Depreciation mental quipment Notes Payable vecounts Payable Interest Payable salarien Payable Dividenda Payable Unearned Rental Pees Income Taxes Payable 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 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 24,000 shares of capital stock in exchange for a total of $240,000 cash. Dec. 1 Purchased for 5278,400 all of the equipment formerly owned by Rent-it. Paid $135,000 cash and issued a 1-year note payable for $143,400. The note, plus all 12 months of accrued interest, are de November The corporation performs adjusting entries monthly. Closing entries are performed annually on December 31. During December of its first year of operations, the corporation entered into the following transactions. Dec. 1 Innued to John and Patty Driver 24,000 shares of capital stock in exchange for a total of $240,000 cash. Dec. 1 Purchased for $278,400 all of the equipment formerly owned by Rent-it. Paid $135,000 cash and losued a 1-year note payable for $143,400. The note, plus all 12 months of accrued interest, are due November 30, Year 2 Dec. 1 Paid $10,500 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 $8,100 cash as advance payment on equipment rental from MeNamer Construction Company. (Credit Unearned Rental Pees.) Dec. 12 Paid salaries of $4,300 for the first two weeks in December. Dec. 15 Excluding the McNamer advance, equipment rental leegy earned during the first 15 days of December amounted to $18,900, of which $12,900 was received in canh. Dec. 17 Purchased on account from Earth Movers, Inc., 5700 in parts needed to perform basic maintenance on a rental tractor. Payment is due in 10 days. Dec. 23 collected $2,400 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 salarios, $4,300. Dec. 27 Paid the account payable to Earth Movers, Inc., 5700. Dec. 28 Declared a dividend of 10 cento 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 $23,000 lawsuit filed on behalf of Kevin Davenport. Hission 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, it 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 publie liability Insurance policy for $8,760. 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 afforda no coverage for the injuries sustained by Kevin co-defendant in a $23,000 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 December 26, Davenport had climbed the tence 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 publie liability insurance policy for $8,760. 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 afforda 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, $670. Payment is due in 30 days. Dec.31 Equipment rental fees earned during the second halt of December amounted to $20,600, of which $16,200 was received in cash. Data for Adjusting Entries in Year 1 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. Any salvage value at the end of its useful life is expected to be negligible and immaterial d. Office supplies on hand at December 31 ore estimated at $610 e. During December , the company earned $4,000 of the rental fees pold in advance by McNamer Construction Company on December 8. 1. As of December 31, six days' rent on the backhoe rented to Mission Landscaping on December 26 has been earned 9. Salaries earned by employees since the last payroll dote (December 26) amounted to $1,600 ot month-end. h. It is estimated that the company is subject to a combined federal and state income tax rate of 30 percent of income before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable in Year 2. Post the entries into the following ledger accounts. (Enter the transaction in chronological order for each of the Ledger accounts. Round your final answers to the nearest whole dollar.) Accounts Receivable Date Cash Debit 240,000 Credit Date Credit Debit 6,000 2.400 135,000 10,500 Dec. 15 Dec 23 Dec. 31 Dec 31 Balance 6,000 3,600 5,700 10,100 2,100 4.400 8,100 4,300 Dec 1 Dec. 1 Dec. 1 Dec 8 Dec 12 Dec. 15 Dec, 23 Dec 26 Dec. 27 Dec 29 Dec 31 Balance 240,000 105,000 94,500 102,600 98,300 111,200 113,600 109,300 108,600 99,840 116,040 12,900 2,400 4,300 700 8,760 16,200 Date Date Dec. 1 Dec 31 Prepaid Rent Debit Credit 10,500 3,500 Balance 10.500 7,000 Unexpired Insurance Debit Credit 8,760 Balance 8.760 Dec. 29 Date Balance Prepaid Rent Debit Credit 10,500 3,500 Date Dec 29 Unexpired Insurance Debit Credit 8,760 Balance 8,760 10.500 Dec. 1 Dec 31 7.000 tes Balance Date Dec 4 Dec 31 Office Supplies Debit Credit 1,600 990 Date Dec. 1 Rental Equipment Debit Credit 278,400 Balance 278.400 1,600 610 Accumulated Depreciation Rental Equipment Date Debit Credit Balance Dec 31 2,900 2,900 Date Dec. 1 Notes Payable Debit Credit 143,400 Balance 143,400 Accounts Payable Debit Credit 1,600 Date Date Dec. 4 Balance Interest Payable Debit Credit 717 Balance 1,600 Dec 31 717 Required information Debit Debit Date Dec. 31 Credit 2,900 Balance 2,900 Date Dec. 1 Credit 143,400 Balance 143,400 Date Dec 31 Interest Payable Debit Credit 717 Balance 717 Date Dec 4 Dec 17 Dec 27 Dec 31 Accounts Payable Debit Credit 1,600 700 700 670 Balance 1,600 2,300 1,600 2,270 Salaries Payable Debit Credit 1,600 Date Dec. 31 Balance Date Dec 28 Dividends Payable Debit Credit 2.400 Balance 2.400 1,600 Date Unearned Rental Fees Debit Credit 8,100 4,000 Balance 8,100 4,100 Date Dec. 31 Income Taxes Payable Debit Credit 7,777 Balance 7.777 Dec 8 Dec. 31 Required information Date Debit Dec. 31 Credit Debit Balance 1,600 Date Dec. 28 Credit 2,400 Balance 2.400 1.600 Date Dec. 8 Dec 31 Unearned Rental Fees Debit Credit 8,100 4,000 Balance 8,100 4.100 Date Dec 31 Income Taxos Payable Debit Credit 7,777 Balance 7.777 Capital Stock Debit Credit 240,000 Retained Earnings Debit Credit Date Date Dec 1 Balance Balance 240,000 Date Dec. 28 Dec. 31 Dividends Debit Credit 2.400 2.400 Balance 2,400 0 Date Dec. 31 Dec. 31 Dec. 31 Income Summary Debit Credit 45,600 27.454 18,146 Balance 45,600 18,146 Prepare an income statement for the year ended December 31. (Round your final answers to the nearest whole dollar.) $ 45,600 SUSQUEHANNA EQUIPMENT RENTALS Income Statement For the Year Ended December 31, Year 1 Revenue Rental fees earned Expenses Salaries expense Maintenance expense Utilities expense Rent expense Office supplies expense Depreciation expense Interest expense 700 S 700 44.900 $ income before income taxes expense Income taxes expense $ 44,900 Prepare a statement of retained earnings for the year ended December 31. (Round your final answers to the nearest whole dollar.) SUSQUEHANNA EQUIPMENT RENTALS Statement of Retained Earnings For the Year Ended December 31, Year 1 Retained earnings, December 1, Year 1 Add: Net Income Less Dividends Retained earnings, December 31, Year 1 $ 0 * Required information Balance Sheet December 31, Year 1 Assets Cash 0 $ 0 Accounts receivable Prepaid rent Unexpired insurance Office supplies Rental equipment Accumulated depreciation: rental equipment Total assets Liabilities & Stockholders' equity Liabilities: Notes payable Accounts payable Interest payable Salaries payable Dividends payable Uneamed rental fees Income taxes payable