90.2K

Verified Solution

Link Copied!

Dec. 1

Issued to Thomas, Ammar and Matt 30,000 new shares with a par value of $8 per share in exchange for a total of $300,000 cash.

Dec. 1

Purchased for $250,000 all of the equipment formerly owned by United Rentals. Paid $150,000 cash and issued a one-year note payable for $11,000. The notes, plus all 12 months of accrued interest, are due on December 31, 2021

Dec. 1

Paid $13,000 to Emerald Realty as three months advance rent on the rental yard and office formerly occupied by United Rentals.

Dec. 4

Purchased office supplies on account from Office Furniture $1,500. 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 Dragon Empire Construction Company. (Credit Unearned Rental Fees.)

Dec. 12

Paid salaries for the first two weeks in December, $5,500.

Dec. 15

Excluding the Dragon Empire advance, equipment rental fees earned during the first 15 days of December amounted to $19,000, of which $13,000 was received in cash.

Dec. 17

Purchased on account from Save Earth Ltd., $650 in parts needed to repair a rental tractor. (Debit an expense account.) Payment is due in 10 days.

Dec. 23

Collected $3,000 of the accounts receivable recorded on December 15.

Dec. 23

Rented a backhoe to Gibbs Landscaping at a price of $300 per day, to be paid when the backhoe is returned. Gibbs Landscaping expects to keep the backhoe for about two or three weeks.

Dec. 26

Paid biweekly salaries, $5,500.

Dec. 27

Paid the account payable to Save Earth Ltd., $650.

Dec. 28

Declared a dividend of $0.2 per share, payable on January 15, 2021.

Dec. 29

Tri-Green Equipment Rentals was named, along with Gibbs Landscaping and Dragon Empire Constructions, as a co-defendant in a $25,000 lawsuit filed on behalf of Ferdinand Robredo. Gibbs Landscaping had left the rented backhoe in a fenced construction site owned by Dragon Empire Construction. After working hours on December 26, Robredo 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 notes accompanying the statements.)

Dec. 29

Purchased a 12-month public-liability insurance policy for $10,800. 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, 2021, and affords no coverage for the injuries sustained by Ferdinand Robredo on December 26.

Dec. 31

Received a bill from Meralco for the month of December, $850. Payment is due in 30 days.

Dec. 31

Equipment rental fees earned during the second half of December amounted to $25,000, of which $18,000 was received in cash.

Data for Adjusting Entries

The advance payment of rent on December 1 covered a period of three months. The annual interest rate on the note payable to United Rentals is 6 percent. The rental equipment is being depreciated by the straight-line method over a period of eight years. Office supplies on hand at December 31 are estimated at $650. During December, the company earned $3,900 of the rental fees paid in advance by Dragon Empire Construction Company on December 8. As of December 31, six days rent on backhoe rented to Gibbs Landscaping on December 26 has been earned. Salaries earned by employees since the last payroll date (December 26) amounted to $1,700 at month-end. It is estimated that the company is subject to an income tax rate of 40 percent of profit before income taxes (total revenue minus expenses other than income taxes). These taxes will be payable in 2021.

Instructions:

Answer & Explanation Solved by verified expert

See Answer