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ModuleSProblemtest-Finanr X 6 Connect X H Module3ProblemTest.docx X I + 6 6 C i ezto.mheducation.com/ext/map/index.htm|'.7_con=con8rexternal_browser=0&launchUrl=https%253A%252F%252Flms.mheducation.com%252Fmghmiddleware%252thepr... ate Submlt Module 3 Problem test 0 Saved Help Save 8- Exlt 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. Part20f2 Cash Accounts Receivable Prepaid Rent Unexpired Insurance Office Supplies Rental Equipment Accumulated Depreciation: Rental Equipment Notes Payable Accounts Payable Interest Payable Salaries Payable Dividends Payable unearned Rental Fees Income Taxes Payable capital stock Retained Earnings Dividends Income Summary Rental Fees Earned salaries Expense 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, the corporation entered into the following transactions. Dec. 1 Issued to John and Patty Driver 27,000 shares of capital stock in exchange for a total of $270,000 cash. Dec. 1 Purchased for $288,000 all of the equipment formerly owned by RentIt. Paid $140,000 cash and issued a 1-year note payable for $148,000. The note, plus all 12 months of accrued interest, are due November 30, Year 2. Dec. 1 Paid $9,000 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 60., $1,700. Payment due in 30 days. (These supplies are expected to last for several months; debit the office supplies asset account.) Dec. 8 Received $8,500 cash as advance payment on equipment rental from McNamer Construction Company. (Credit unearned Rental Fees.) Dec.12 Paid salaries for the first two weeks in December, $4,700. Dec.15 Excluding the McNamer advance, equipment rental fees earned during the first amounted to $13,600, of which $13,000 was received in cash. Dec.17 Purchased on account from Earth Movers, Inc., $800 in parts needed to repair a rental tractor. an expense account.) Payment is due in 10 days. Dec.13 Collected $2,400 of the accounts receivable recorded on December 15. Dac.26 Rented a backhoe to Mission Landscaping at a price of $320 per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two or three weeks. 15 days of December (Debit my '2}01'2 B Module 3 Problem test - Finance X Connect X Module 3 Problem Test.docx X + C ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252FIms.mheducation.com%252Fmghmiddleware%252Fmhepr... C Module 3 Problem test i Saved Help Save & Exit Submit g. Salaries earned by employees since the last payroll date (December 26) amounted to $1,400 at month-end. 2 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 in Year 2. Part 2 of 2 Prepare an income statement for the year ended December 31. (Round your final answers to the nearest whole dollar.) SUSQUEHANNA EQUIPMENT RENTALS Income Statement 01:06:37 For the Year Ended December 31, Year 1 Revenue: Expenses EA EA o o 0 Mc Graw Hill 2 Education
