On December 1, Year 1, John and Patty Driver formed a corporation called Susquehanna Equipment...
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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 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 of its first year of operations, the corporation entered into the following transactions. Dec. 1 Issued to John and Patty Driver 29,000 shares of capital stock in exchange for a total of $290,000 cash. Dec. 1 Purchased for $230,400 all of the equipment formerly owned by Rent-It. Paid $136,000 cash and issued a 1-year note payable for $94,400. The note, plus all 12 months of accrued interest, are due November 30, Year 2. Dec. 1 Paid $9,600 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., $1,980. Payment due in 30 days. (These supplies are expected to last for several months; debit the Office Supplies asset account.) Dec. 8 Received $8,600 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned Rental Fees.) Dec.12 Paid salaries of $5,100 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 $18,480, of which $12,000 was received in cash. Dec.17 Purchased on account from Earth Movers, Inc., $800 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 $268 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, $5,100. Dec. 27 Paid the account payable to Earth Movers, Inc., $800. 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 $24,000 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 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 $8.640. This policy protects the company against Dec.29 Purchased a 12-month public liability insurance policy for $8,640. 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, $610. Payment is due in 30 days. Dec.31 Equipment rental fees earned during the second half of December amounted to $20,000, 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 are estimated at $670. e. During December, the company earned $4,400 of the rental fees paid 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. g. Salaries earned by employees since the last payroll date (December 26) amounted to $1,300 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. 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.) Date Debit Cash Credit Balance Date Accounts Receivable Debit Credit Balance 1 1 Required information V 1 1 2 3 4 5 6 7 8 Date Dec. 1 Dec. 1 Dec. 1 Dec. 4 Dec. 8 Dec. 12 Dec. 15 Dec. 17 Dec. 23 Cash Capital stock Rental equipment Cash Notes payable Prepaid rent Cash Office supplies Accounts payable Cash Unearned rental fees Salaries expense Cash Cash Accounts receivable Rental fees earned Maintenance expense Accounts payable Cash Accounts receivable UCLICIAI JUDITO UCHIL 290,000 230,400 9,600 1,900 8,600 5,100 12,000 6,400 800 2,400 VICUIL 290,000 136,000 94,400 9,600 1,900 8,600 5,100 18,400 800 2,400 Required information 8 9 10 11 12 13 14 15 16 17 Dec. 17 Dec. 23 Dec. 26 Dec. 26 Dec. 27 Dec. 28 Dec. 29 Dec. 29 Dec. 31 Dec. 31 Maintenance expense Accounts payable Cash Accounts receivable No journal entry required Salaries expense Cash Accounts payable Cash Dividends Dividends payable No journal entry required Unexpired insurance Cash Utilities expense Accounts payable Cash Accounts receivable Rental fees earned Dan 4D 800 2,400 5,100 800 2,900 8,640 610 16,200 3,800 800 2,400 5,100 800 2,900 8,640 610 20,000 Prepare the necessary adjusting entries for December. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) View transaction list No 1 2 3 4 5 6 7 8 Date Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 View journal entry worksheet Rent expense Prepaid rent Interest expense Interest payable Depreciation expense Accumulated depreciation: rental equipment Office supplies expense Office supplies Unearned rental fees Rental fees earned Accounts receivable Rental fees earned Salaries expense Salaries payable General Journal Income taxes expense Income taxes payable Debit 3,200 472 2,400 1,230 4,400 1,560 1,300 9,765 Credit 3,200 472 2,400 1,230 4,400 1,560 1,300 9,765 Complete this question by entering your answers in the tabs below. Req 1A Req 18 Req 1C Prepare closing entries and post to ledger accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) View transaction list Journal entry worksheet 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.) Date Date Date Debit Debit Cash Prepaid Rent Credit Debit Credit Office Supplies Credit Balance Balance Balance Annumalsinal Damennintian: Dental Cocinmant Date Date Date Accounts Receivable Debit Credit Unexpired Insurance Debit Credit Rental Equipment Debit Credit Notor Dashla Balance Balance Balance Required information Date Date Date Date Date Accounts Payable Debit Salaries Payable Debit Credit Unearned Rental Fees Debit Credit Debit Credit Capital Stock Debit Credit Dividends Credit Balance Balance Balance Balance Balance Date Date Date Date Date Interest Payable Debit Credit Dividends Payable Debit Credit Income Taxes Payable Debit Credit Retained Earnings Debit Debit Credit Income Summary Credit Balance Balance Balance Balance Balance Date Date Date Date Debit Dividends Credit Rental Fees Earned Debit Credit Maintenance Expense Debit Credit Rent Expense Debit Credit Depreciation Expense Balance Balance Balance Balance Date Date Date Date Income Summary Debit Salaries Expense Debit Credit Debit Credit Utilities Expense Credit Office Supplies Expense Debit Credit Interest Expense Balance Balance Balance Balance 2 Part 2 of 7 14 points eBook Print References Required information Date Date Date Date Maintenance Expense Debit Credit Rent Expense Debit Credit Depreciation Expense Debit Credit Income Taxes Expense Debit Credit Balance Balance Balance Balance Date Date Date Utilities Expense Debit Credit Office Supplies Expense Debit Credit Interest Expense Debit Credit Balance Balance Balance 3 Part 3 of 7 14 points eBook P Print n References Required information Balance sheet accounts: Cash Accounts receivable Prepaid rent Unexpired insurance Office supplies Rental equipment Notes payable Accounts payable Unearned rental fees Dividends payable Capital stock Retained earnings Dividends Interest payable Accumulated depreciation: rental equipment Salaries payable Income taxes payable Income statement accounts: Rental fees earned Salaries expense Maintenance expense Utilities expense Rent expense Interest expense Depreciation expense Office supplies expense Income taxes expense Net income Totals $ Trial Balance Debit 0 S Credit $ Adjustments Debit 0 S Credit 0 S Adjusted Trial Balance Credit Debit 0 $ 0 S S Income Statement Debit Credit 0 S 0 S 0 $ 0$ Balance Sheet Credit Debit 0 S 0 $ 0 0 4 Part 4 of 7 14 points eBook Print References before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable In Year 2. Prepare an Income statement for the year ended December 31. (Round your final answers to the nearest whole dollar.) Revenue: Expenses SUSQUEHANNA EQUIPMENT RENTALS Income Statement For the Year Ended December 31, Year 1 $ S $ 0 0 0 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 Retained earnings, December 31, Year 1 S 0 6 Part 6 of 7 15 points eBook Print References Required information Rental equipment Total assets Liabilities: Total liabilities Stockholders' equity: SUSQUEHANNA EQUIPMENT RENTALS Balance Sheet December 31, Year 1 Assets Liabilities & Stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity $ $ $ $ 0 0 0 0 0 7 Part 7 of 7 6 pints eBook Print References Prepare an after-closing trial balance as of December 31. (Round your final answers to the nearest whole dollar.) Totals SUSQUEHANNA EQUIPMENT RENTALS After-Closing Trial Balance December 31, Year 1 $ Debit 0 $ Credit 0
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