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The corporation performs adjusting entries monthly. Closing entries are performed annually on December 3 1 . During December of its first year of operations, the
The corporation performs adjusting entries monthly. Closing entries are performed annually on December During December of its first year of operations, the corporation entered into the following transactions:
December Issued to Wayne and Susan Li shares of capital stock in exchange for a total of $ cash.
December Purchased for $ all of the equipment formerly owned by RentIt Paid $ cash and issued a oneyear note payable for $ The note, plus all months of accrued interest, are due November Year
December Paid $ to Shapiro Realty as three months advance rent on the rental yard and office formerly occupied by RentIt
December Purchased office supplies on account from Modern Office Company, $ Payment due in days. These supplies are expected to last for several months; debit the Office Supplies asset account.
December Received $ cash as advance payment on equipment rental from McNamer Construction Company. Credit Unearned Rental Fees.
December Paid salaries of $ for the first two weeks in December.
December Excluding the McNamer advance, equipment rental fees earned during the first days of December amounted to $ of which $ was received in cash.
December Purchased on account from Earth Movers, Incorporated, $ in parts needed to perform basic maintenance on a rental tractor. Payment is due in days.
December Collected $ of the accounts receivable recorded on December
December Rented a backhoe to Mission Landscaping at a price of $ per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two or three weeks.
December Paid biweekly salaries, $
December Paid the account payable to Earth Movers, Incorporated, $
December Declared a dividend of cents per share, payable on January Year Hint: Credit the Dividends Payable account.
December French Broad Equipment Rentals was named, along with Mission Landscaping and Collier Construction, as a codefendant in a $ 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 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 companys 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 the notes accompanying the statements.
December Purchased a month public liability insurance policy for $ This policy protects the company against liability for injuries and property damage caused by its equipment. However, the policy goes into effect on January Year and affords no coverage for the injuries sustained by Kevin Davenport on December
December Received a bill from Universal Utilities for the month of December, $ Payment is due in days.
December Equipment rental fees earned during the second half of December amounted to $ of which $ was received in cash.
Data for Adjusting Entries in Year
A The advance payment of rent on December covered a period of three months.
B The annual interest rate on the note payable to RentIt is percent.
C The rental equipment is being depreciated by the straightline 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 are estimated at $
E During December, the company earned $ of the rental fees paid in advance by McNamer Construction Company on December
F As of December six days rent on the backhoe rented to Mission Landscaping on December has been earned.
G Salaries earned by employees since the last payroll date December amounted to $ at monthend.
H It is estimated that the company is subject to a combined federal and state income tax rate of percent of income before income taxes total revenue minus all expenses other than income taxes These taxes will be payable in Year
Accounts used in problem:
Cash
Accounts Receivable
Prepaid Rent
Prepaid Insurance
Office Supplies
Rental Equipment
Notes Payable
Accounts Payable
Interest Payable
Salaries Payable
Dividends Payable
Unearned Rental Fees
Income Taxes Payable
Accumulated Depreciation: Rental Equipment
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
Required:
Create a table for the trial balance
Create a table for adjustments
Create a table for the adjusted trial balance
Create a table for the income statement
Create a table for the balance sheet
Also Find the Net Incomes for each
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