Account problems | Accounting homework help

  

[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

Capital Stock

 

Accounts Receivable

Retained Earnings

 

Prepaid Rent

Dividends

 

Unexpired Insurance

Income Summary

 

Office Supplies

Rental Fees Earned

 

Rental Equipment

Salaries Expense

 

Accumulated Depreciation: Rental   Equipment

Maintenance Expense

 

Notes Payable

Utilities Expense

 

Accounts Payable

Rent Expense

 

Interest Payable

Office Supplies Expense

 

Salaries Payable

Depreciation Expense

 

Dividends Payable

Interest Expense

 

Unearned Rental Fees

Income Taxes Expense

 

Income Taxes Payable

       

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 20,000 shares of capital   stock in exchange for a total of $240,000 cash.

 

Dec.

1

Purchased for $288,000 all of the equipment formerly owned   by Rent-It. Paid $168,000 cash and issued a 1-year note payable for $120,000.   The note, plus all 12 months of accrued interest, are due November 30, Year   2.

 

Dec.

1

Paid $14,400 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., $1,200. Payment due in 30 days. (These supplies are expected to last for   several months; debit the Office Supplies asset account.)

 

Dec.

8

Received $9,600 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, $6,240.

 

Dec.

15

Excluding the McNamer advance, equipment rental fees   earned during the first 15 days of December amounted to $21,600, of which   $14,400 was received in cash.

 

Dec.

17

Purchased on account from Earth Movers, Inc., $720 in   parts needed to repair a rental tractor. (Debit an expense account.) 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 $300   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, $6,240.

 

Dec.

27

Paid the account payable to Earth Movers, Inc., $720.

 

Dec.

28

Declared a dividend of 12 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 $30,000   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   $11,520. 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, $840. Payment is due in 30 days.

 

Dec.

31

Equipment rental fees earned during the second half of   December amounted to $24,000, of which $18,720 was received in cash.

Data for Adjusting Entries

  1. The advance payment of      rent on December 1 covered a period of three months.
  2. The annual interest rate      on the note payable to Rent-It is 6 percent.
  3. The rental equipment is      being depreciated by the straight-line method over a period of eight      years.
  4. Office supplies on hand at      December 31 are estimated at $720.
  5. During December, the      company earned $4,440 of the rental fees paid in advance by McNamer      Construction Company on December 8.
  6. As of December 31, six      days’ rent on the backhoe rented to Mission Landscaping on December 26 has      been earned.
  7. Salaries earned by      employees since the last payroll date (December 26) amounted to $1,680 at      month-end.
  8. 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.

1-a. Journalize the December transactions. Do not record adjusting entries at this point.

1-b. Prepare the necessary adjusting entries for December.

1-c. Prepare closing entries and post to ledger accounts.

2

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.

  

 

Cash

Capital Stock

 

Accounts Receivable

Retained Earnings

 

Prepaid Rent

Dividends

 

Unexpired Insurance

Income Summary

 

Office Supplies

Rental Fees Earned

 

Rental Equipment

Salaries Expense

 

Accumulated Depreciation: Rental   Equipment

Maintenance Expense

 

Notes Payable

Utilities Expense

 

Accounts Payable

Rent Expense

 

Interest Payable

Office Supplies Expense

 

Salaries Payable

Depreciation Expense

 

Dividends Payable

Interest Expense

 

Unearned Rental Fees

Income Taxes Expense

 

Income Taxes Payable

       

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 20,000 shares of capital   stock in exchange for a total of $240,000 cash.

 

Dec.

1

Purchased for $288,000 all of the equipment formerly owned   by Rent-It. Paid $168,000 cash and issued a 1-year note payable for $120,000.   The note, plus all 12 months of accrued interest, are due November 30, Year   2.

 

Dec.

1

Paid $14,400 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., $1,200. Payment due in 30 days. (These supplies are expected to last for   several months; debit the Office Supplies asset account.)

 

Dec.

8

Received $9,600 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, $6,240.

 

Dec.

15

Excluding the McNamer advance, equipment rental fees   earned during the first 15 days of December amounted to $21,600, of which   $14,400 was received in cash.

 

Dec.

17

Purchased on account from Earth Movers, Inc., $720 in   parts needed to repair a rental tractor. (Debit an expense account.) 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 $300   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, $6,240.

 

Dec.

27

Paid the account payable to Earth Movers, Inc., $720.

 

Dec.

28

Declared a dividend of 12 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 $30,000   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   $11,520. 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, $840. Payment is due in 30 days.

 

Dec.

31

Equipment rental fees earned during the second half of   December amounted to $24,000, of which $18,720 was received in cash.

Data for Adjusting Entries

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.

d. Office supplies on hand at December 31 are estimated at $720.

e. During December, the company earned $4,440 of the rental fees paid in advance by McNamer Construction Company on December 8.

f. 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 $1,680 at month-end.

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.

Post the entries into the following ledger accounts. (Enter the transaction in chronological order for each of the Ledger accounts.)

Q3

[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

Capital Stock

 

Accounts Receivable

Retained Earnings

 

Prepaid Rent

Dividends

 

Unexpired Insurance

Income Summary

 

Office Supplies

Rental Fees Earned

 

Rental Equipment

Salaries Expense

 

Accumulated Depreciation: Rental   Equipment

Maintenance Expense

 

Notes Payable

Utilities Expense

 

Accounts Payable

Rent Expense

 

Interest Payable

Office Supplies Expense

 

Salaries Payable

Depreciation Expense

 

Dividends Payable

Interest Expense

 

Unearned Rental Fees

Income Taxes Expense

 

Income Taxes Payable

       

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 20,000 shares of capital   stock in exchange for a total of $240,000 cash.

 

Dec.

1

Purchased for $288,000 all of the equipment formerly owned   by Rent-It. Paid $168,000 cash and issued a 1-year note payable for $120,000.   The note, plus all 12 months of accrued interest, are due November 30, Year   2.

 

Dec.

1

Paid $14,400 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., $1,200. Payment due in 30 days. (These supplies are expected to last for   several months; debit the Office Supplies asset account.)

 

Dec.

8

Received $9,600 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, $6,240.

 

Dec.

15

Excluding the McNamer advance, equipment rental fees   earned during the first 15 days of December amounted to $21,600, of which   $14,400 was received in cash.

 

Dec.

17

Purchased on account from Earth Movers, Inc., $720 in   parts needed to repair a rental tractor. (Debit an expense account.) 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 $300   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, $6,240.

 

Dec.

27

Paid the account payable to Earth Movers, Inc., $720.

 

Dec.

28

Declared a dividend of 12 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 $30,000   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   $11,520. 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, $840. Payment is due in 30 days.

 

Dec.

31

Equipment rental fees earned during the second half of   December amounted to $24,000, of which $18,720 was received in cash.

Data for Adjusting Entries

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.

d. Office supplies on hand at December 31 are estimated at $720.

e. During December, the company earned $4,440 of the rental fees paid in advance by McNamer Construction Company on December 8.

f. 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 $1,680 at month-end.

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.

Complete the 10-column worksheet for the year ended December 31. (For accounts where multiple Adjustments are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)  

[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

Capital Stock

 

Accounts Receivable

Retained Earnings

 

Prepaid Rent

Dividends

 

Unexpired Insurance

Income Summary

 

Office Supplies

Rental Fees Earned

 

Rental Equipment

Salaries Expense

 

Accumulated Depreciation: Rental   Equipment

Maintenance Expense

 

Notes Payable

Utilities Expense

 

Accounts Payable

Rent Expense

 

Interest Payable

Office Supplies Expense

 

Salaries Payable

Depreciation Expense

 

Dividends Payable

Interest Expense

 

Unearned Rental Fees

Income Taxes Expense

 

Income Taxes Payable

       

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 20,000 shares of capital   stock in exchange for a total of $240,000 cash.

 

Dec.

1

Purchased for $288,000 all of the equipment formerly owned   by Rent-It. Paid $168,000 cash and issued a 1-year note payable for $120,000.   The note, plus all 12 months of accrued interest, are due November 30, Year   2.

 

Dec.

1

Paid $14,400 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., $1,200. Payment due in 30 days. (These supplies are expected to last for   several months; debit the Office Supplies asset account.)

 

Dec.

8

Received $9,600 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, $6,240.

 

Dec.

15

Excluding the McNamer advance, equipment rental fees   earned during the first 15 days of December amounted to $21,600, of which   $14,400 was received in cash.

 

Dec.

17

Purchased on account from Earth Movers, Inc., $720 in   parts needed to repair a rental tractor. (Debit an expense account.) 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 $300   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, $6,240.

 

Dec.

27

Paid the account payable to Earth Movers, Inc., $720.

 

Dec.

28

Declared a dividend of 12 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 $30,000   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   $11,520. 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, $840. Payment is due in 30 days.

 

Dec.

31

Equipment rental fees earned during the second half of   December amounted to $24,000, of which $18,720 was received in cash.

Data for Adjusting Entries

  1. The advance payment of      rent on December 1 covered a period of three months.
  2. The annual interest rate      on the note payable to Rent-It is 6 percent.
  3. The rental equipment is      being depreciated by the straight-line method over a period of eight      years.
  4. Office supplies on hand at      December 31 are estimated at $720.
  5. During December, the      company earned $4,440 of the rental fees paid in advance by McNamer      Construction Company on December 8.
  6. As of December 31, six      days’ rent on the backhoe rented to Mission Landscaping on December 26 has      been earned.
  7. Salaries earned by      employees since the last payroll date (December 26) amounted to $1,680 at      month-end.
  8. 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.

1-a. Journalize the December transactions. Do not record adjusting entries at this point.

1-b. Prepare the necessary adjusting entries for December.

1-c. Prepare closing entries and post to ledger accounts.

2

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.

  

 

Cash

Capital Stock

 

Accounts Receivable

Retained Earnings

 

Prepaid Rent

Dividends

 

Unexpired Insurance

Income Summary

 

Office Supplies

Rental Fees Earned

 

Rental Equipment

Salaries Expense

 

Accumulated Depreciation: Rental   Equipment

Maintenance Expense

 

Notes Payable

Utilities Expense

 

Accounts Payable

Rent Expense

 

Interest Payable

Office Supplies Expense

 

Salaries Payable

Depreciation Expense

 

Dividends Payable

Interest Expense

 

Unearned Rental Fees

Income Taxes Expense

 

Income Taxes Payable

       

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 20,000 shares of capital   stock in exchange for a total of $240,000 cash.

 

Dec.

1

Purchased for $288,000 all of the equipment formerly owned   by Rent-It. Paid $168,000 cash and issued a 1-year note payable for $120,000.   The note, plus all 12 months of accrued interest, are due November 30, Year   2.

 

Dec.

1

Paid $14,400 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., $1,200. Payment due in 30 days. (These supplies are expected to last for   several months; debit the Office Supplies asset account.)

 

Dec.

8

Received $9,600 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, $6,240.

 

Dec.

15

Excluding the McNamer advance, equipment rental fees   earned during the first 15 days of December amounted to $21,600, of which   $14,400 was received in cash.

 

Dec.

17

Purchased on account from Earth Movers, Inc., $720 in   parts needed to repair a rental tractor. (Debit an expense account.) 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 $300   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, $6,240.

 

Dec.

27

Paid the account payable to Earth Movers, Inc., $720.

 

Dec.

28

Declared a dividend of 12 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 $30,000   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   $11,520. 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, $840. Payment is due in 30 days.

 

Dec.

31

Equipment rental fees earned during the second half of   December amounted to $24,000, of which $18,720 was received in cash.

Data for Adjusting Entries

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.

d. Office supplies on hand at December 31 are estimated at $720.

e. During December, the company earned $4,440 of the rental fees paid in advance by McNamer Construction Company on December 8.

f. 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 $1,680 at month-end.

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.

Post the entries into the following ledger accounts. (Enter the transaction in chronological order for each of the Ledger accounts.)

Q3

[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

Capital Stock

 

Accounts Receivable

Retained Earnings

 

Prepaid Rent

Dividends

 

Unexpired Insurance

Income Summary

 

Office Supplies

Rental Fees Earned

 

Rental Equipment

Salaries Expense

 

Accumulated Depreciation: Rental   Equipment

Maintenance Expense

 

Notes Payable

Utilities Expense

 

Accounts Payable

Rent Expense

 

Interest Payable

Office Supplies Expense

 

Salaries Payable

Depreciation Expense

 

Dividends Payable

Interest Expense

 

Unearned Rental Fees

Income Taxes Expense

 

Income Taxes Payable

       

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 20,000 shares of capital   stock in exchange for a total of $240,000 cash.

 

Dec.

1

Purchased for $288,000 all of the equipment formerly owned   by Rent-It. Paid $168,000 cash and issued a 1-year note payable for $120,000.   The note, plus all 12 months of accrued interest, are due November 30, Year   2.

 

Dec.

1

Paid $14,400 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., $1,200. Payment due in 30 days. (These supplies are expected to last for   several months; debit the Office Supplies asset account.)

 

Dec.

8

Received $9,600 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, $6,240.

 

Dec.

15

Excluding the McNamer advance, equipment rental fees   earned during the first 15 days of December amounted to $21,600, of which   $14,400 was received in cash.

 

Dec.

17

Purchased on account from Earth Movers, Inc., $720 in   parts needed to repair a rental tractor. (Debit an expense account.) 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 $300   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, $6,240.

 

Dec.

27

Paid the account payable to Earth Movers, Inc., $720.

 

Dec.

28

Declared a dividend of 12 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 $30,000   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   $11,520. 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, $840. Payment is due in 30 days.

 

Dec.

31

Equipment rental fees earned during the second half of   December amounted to $24,000, of which $18,720 was received in cash.

Data for Adjusting Entries

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.

d. Office supplies on hand at December 31 are estimated at $720.

e. During December, the company earned $4,440 of the rental fees paid in advance by McNamer Construction Company on December 8.

f. 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 $1,680 at month-end.

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.

Complete the 10-column worksheet for the year ended December 31. (For accounts where multiple Adjustments are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)  

[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

Capital Stock

 

Accounts Receivable

Retained Earnings

 

Prepaid Rent

Dividends

 

Unexpired Insurance

Income Summary

 

Office Supplies

Rental Fees Earned

 

Rental Equipment

Salaries Expense

 

Accumulated Depreciation: Rental   Equipment

Maintenance Expense

 

Notes Payable

Utilities Expense

 

Accounts Payable

Rent Expense

 

Interest Payable

Office Supplies Expense

 

Salaries Payable

Depreciation Expense

 

Dividends Payable

Interest Expense

 

Unearned Rental Fees

Income Taxes Expense

 

Income Taxes Payable

       

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 20,000 shares of capital   stock in exchange for a total of $240,000 cash.

 

Dec.

1

Purchased for $288,000 all of the equipment formerly owned   by Rent-It. Paid $168,000 cash and issued a 1-year note payable for $120,000.   The note, plus all 12 months of accrued interest, are due November 30, Year   2.

 

Dec.

1

Paid $14,400 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., $1,200. Payment due in 30 days. (These supplies are expected to last for   several months; debit the Office Supplies asset account.)

 

Dec.

8

Received $9,600 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, $6,240.

 

Dec.

15

Excluding the McNamer advance, equipment rental fees   earned during the first 15 days of December amounted to $21,600, of which   $14,400 was received in cash.

 

Dec.

17

Purchased on account from Earth Movers, Inc., $720 in   parts needed to repair a rental tractor. (Debit an expense account.) 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 $300   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, $6,240.

 

Dec.

27

Paid the account payable to Earth Movers, Inc., $720.

 

Dec.

28

Declared a dividend of 12 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 $30,000   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   $11,520. 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, $840. Payment is due in 30 days.

 

Dec.

31

Equipment rental fees earned during the second half of   December amounted to $24,000, of which $18,720 was received in cash.

Data for Adjusting Entries

  1. The advance payment of      rent on December 1 covered a period of three months.
  2. The annual interest rate      on the note payable to Rent-It is 6 percent.
  3. The rental equipment is      being depreciated by the straight-line method over a period of eight      years.
  4. Office supplies on hand at      December 31 are estimated at $720.
  5. During December, the      company earned $4,440 of the rental fees paid in advance by McNamer      Construction Company on December 8.
  6. As of December 31, six      days’ rent on the backhoe rented to Mission Landscaping on December 26 has      been earned.
  7. Salaries earned by      employees since the last payroll date (December 26) amounted to $1,680 at      month-end.
  8. 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.

1-a. Journalize the December transactions. Do not record adjusting entries at this point.

1-b. Prepare the necessary adjusting entries for December.

1-c. Prepare closing entries and post to ledger accounts.

2

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.

  

 

Cash

Capital Stock

 

Accounts Receivable

Retained Earnings

 

Prepaid Rent

Dividends

 

Unexpired Insurance

Income Summary

 

Office Supplies

Rental Fees Earned

 

Rental Equipment

Salaries Expense

 

Accumulated Depreciation: Rental   Equipment

Maintenance Expense

 

Notes Payable

Utilities Expense

 

Accounts Payable

Rent Expense

 

Interest Payable

Office Supplies Expense

 

Salaries Payable

Depreciation Expense

 

Dividends Payable

Interest Expense

 

Unearned Rental Fees

Income Taxes Expense

 

Income Taxes Payable

       

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 20,000 shares of capital   stock in exchange for a total of $240,000 cash.

 

Dec.

1

Purchased for $288,000 all of the equipment formerly owned   by Rent-It. Paid $168,000 cash and issued a 1-year note payable for $120,000.   The note, plus all 12 months of accrued interest, are due November 30, Year   2.

 

Dec.

1

Paid $14,400 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., $1,200. Payment due in 30 days. (These supplies are expected to last for   several months; debit the Office Supplies asset account.)

 

Dec.

8

Received $9,600 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, $6,240.

 

Dec.

15

Excluding the McNamer advance, equipment rental fees   earned during the first 15 days of December amounted to $21,600, of which   $14,400 was received in cash.

 

Dec.

17

Purchased on account from Earth Movers, Inc., $720 in   parts needed to repair a rental tractor. (Debit an expense account.) 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 $300   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, $6,240.

 

Dec.

27

Paid the account payable to Earth Movers, Inc., $720.

 

Dec.

28

Declared a dividend of 12 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 $30,000   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   $11,520. 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, $840. Payment is due in 30 days.

 

Dec.

31

Equipment rental fees earned during the second half of   December amounted to $24,000, of which $18,720 was received in cash.

Data for Adjusting Entries

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.

d. Office supplies on hand at December 31 are estimated at $720.

e. During December, the company earned $4,440 of the rental fees paid in advance by McNamer Construction Company on December 8.

f. 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 $1,680 at month-end.

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.

Post the entries into the following ledger accounts. (Enter the transaction in chronological order for each of the Ledger accounts.)

Q3

[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

Capital Stock

 

Accounts Receivable

Retained Earnings

 

Prepaid Rent

Dividends

 

Unexpired Insurance

Income Summary

 

Office Supplies

Rental Fees Earned

 

Rental Equipment

Salaries Expense

 

Accumulated Depreciation: Rental   Equipment

Maintenance Expense

 

Notes Payable

Utilities Expense

 

Accounts Payable

Rent Expense

 

Interest Payable

Office Supplies Expense

 

Salaries Payable

Depreciation Expense

 

Dividends Payable

Interest Expense

 

Unearned Rental Fees

Income Taxes Expense

 

Income Taxes Payable

       

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 20,000 shares of capital   stock in exchange for a total of $240,000 cash.

 

Dec.

1

Purchased for $288,000 all of the equipment formerly owned   by Rent-It. Paid $168,000 cash and issued a 1-year note payable for $120,000.   The note, plus all 12 months of accrued interest, are due November 30, Year   2.

 

Dec.

1

Paid $14,400 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., $1,200. Payment due in 30 days. (These supplies are expected to last for   several months; debit the Office Supplies asset account.)

 

Dec.

8

Received $9,600 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, $6,240.

 

Dec.

15

Excluding the McNamer advance, equipment rental fees   earned during the first 15 days of December amounted to $21,600, of which   $14,400 was received in cash.

 

Dec.

17

Purchased on account from Earth Movers, Inc., $720 in   parts needed to repair a rental tractor. (Debit an expense account.) 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 $300   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, $6,240.

 

Dec.

27

Paid the account payable to Earth Movers, Inc., $720.

 

Dec.

28

Declared a dividend of 12 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 $30,000   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   $11,520. 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, $840. Payment is due in 30 days.

 

Dec.

31

Equipment rental fees earned during the second half of   December amounted to $24,000, of which $18,720 was received in cash.

Data for Adjusting Entries

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.

d. Office supplies on hand at December 31 are estimated at $720.

e. During December, the company earned $4,440 of the rental fees paid in advance by McNamer Construction Company on December 8.

f. 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 $1,680 at month-end.

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.

Complete the 10-column worksheet for the year ended December 31. (For accounts where multiple Adjustments are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)

 

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