[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. 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 Incone Summary Rental Fees Earned Salaries Expense Maintenance Expense Utilities Expense Rent Expense Office Supplies Expense Depreciation Experise 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 21,000 shares of capital stock in exchange for total of $220,000 cash Dec. 1 Purchased for $249,600 all of the equipment formerly wted by ent-it. Paid $235.000 cash and issued 1 year note payable for $114,600. The note) plus ant 12 months of accrued interest, are du November 30, Year Dec. 1 Paid $11,700 to Shapiro Realty as three months advance rint on the rental yard and office formerly occupied by Rent-It Dec. e Purchased office supplies on account fron Modern Office Co., $2,600. Payment due in se days. These suppies are expected to last for several months, debit the Office Supplies asset account Dec. 8 Received $9,000 cash as advance payment on equipment rental from Melaner Construction Company. (Credit Uneanned Rental Fees.) Dec. 12 Paid Salaries of $4,980 for the first two weeks in December Dec. 15 Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to $18,00, of which $12,800 was received in cash.. Dec. 17 Purchased on account from Earth Movers, Inc. $1, in parts needed to perform basi nintenance on a rental tractor'. Payment is due in 10 days Dec. 23 collected $2,800 of the accounts receivable recorded on December 15 Dec.26 Rented a backhoe to Mission Landscaping at a price of 5330 per day, to be paid when the backhoe is returned Mission Landscaping expects to keep the backhoe for about two or three weeks Dec. 23 Collected $2,888 of the accounts receivable recorded on December 15. Dec. 26 Rented a backhoe to Mission Landscaping at a price of $330 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, 54,900 Dec. 27 Paid the account payable to Earth Movers, Inc. $1,600. 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 $21, eee 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 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 public liability insurance policy for $9,880. 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, $682. Payment is due in 30 days. Dec 31 Equipment rental fees earned during the second half of December amounted to $21,800, of which $15,78e wasl. received in cash Data for Adjusting Entries In Year 1 9. 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 suppiles on hand at December 31 are estimated at $610. e. During December, the company earned $3.900 of the rental fees paid in advance by McNamer Construction Company on December 8 t. As of December 31. six days' rent on the backhoe rented to Mission Landscaping on December 26 has been earned. Q. Salaries earned by employees since the last payrol 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 30 percent of income before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable in Year 2 SUSQUENA EQUIPMENT RENTALS Wet December Year Austment Adjusted Trsal alan Deti CIF CP THE Deba che Staten be Cro melange the Teht Cr CE 3 240.000 Balance she counts Cash Accue Prepaid Unawe Onion Rental Notes ayable A Undres Dividende Capitu ules) Malang Diva payable Acumuladder Saarissable incompati income statement accounts Race Income statement accounts Ratasemed Sesi U 240.000 rest Deporte es os 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 Earnings Dividends Income Summary Rental Fees Earned Salaries Expense Cash Accounts Receivable Prepaid Rent Unexpired Insurance Office Supplies Rental Equipment Accumulated Depreciation Rental Equipment Notes Payable ACC Payable Interest Payable Salaries Payable Dividends Payable Unearned Hental Fees Income Taxes Payable Maintenance Expense Utilities Expense Rent Expense Office Supplies Expense Depreciation Expanse 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 21,800 shares of capital stock exchange for a total of $210.000 cash Dec. 1 Purchased for $249.600 all of the equipment formerly owned by Rent-It paid $135,000 cash and issued a 1-yean note payable for $114,600. The note, plus all 12 months of accrued interest, are due November 30, Year Dec. 1 Paid $1110 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 CON$1,600. Payment du in days the supplies are expected toast for several months debit the Office Supplies asset account Dec. Heceived 59,00 cash advance payment on equipment rental fron McNaman Construction Company Credit Unearned 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 21, eee shares of capital stock in exchange for a total of $210, eee cash Dec. 1 Purchased for $249,688 all of the equipment formerly owned by Hent-it. Pala $135,000 cash and issued a 1-year note payable for $114,600. The note, plus all 12 months of accrued interest, are due November 30, Year 2 Dec. 1 Paid $11,700 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 $9,eee cash as advance payment on equipment rental from McNacer construction Company. (Credit Unearned Rental fees.) Dec. 12 Paid salaries of $4,9ee for the first two weeks in December Dec.15 Excluding the Menamer advance, equipment rental fees earned during the first 15 days of December amountud to $18,800, of which $12,888 was received in cash. Dec. 17 Purchased on account from Earth Movers, Inc. $1,000 in parts needed to perform basic maintenance on a rental tractor. Payment is due in 10 days. Dec. 23 collected $2,800 of the accounts receivable recorded on December 15, Dec.26 sented a backhoe to Mission Landscaping at a price of $334 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, 54.9ee. Dec. 27 Paid the account payable to Earth Movers, Inc. $1,000 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 $21,098 lawsuit filed on behalf of Kevin Oavenport. Mission Landscaping had left the rented backhoe in a fenced construction site owned by Collier construction. After working hours on Decembe 26 Davenport had climbed the fence to play on parked construction equipaent. While playing on the backhoe he fell and broke his arm. The extent of the company s lepral and financial responsibility for this accidents if any. cannot be determined at this time (Note: This event does not require a journal entry at this time outy require disclosure in notes accompanying the statements) Dec. 29 purchased a 12-month public liability foorance policy for $2,000. This policy protects the company against 11ability for injuries and property damage caused by its equipment. However, the policy goes into effect on January 1, Vear 2) and affords na coverage for the ories Sustained by Kavio Davenport on December 20 Dec 31 Received bil from Universal Utilities for the month of December 3680 Payments due in 4 days Dec.31 Equipment rental fons earned during the second half of December touted to $21.000 OFWSCH $150 received in cash