- Pleas List The Answers As The Answers Sheet Thank You Pleas List The Answers As The Answers Sheet Thank You 1 (544.18 KiB) Viewed 20 times
On 1 December 2013, 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 Share Capital 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 31 December. During December, the corporation entered into the following transactions: Dec. 1 Issued to John and Patty Driver 30,000 new shares in exchange for a total of $300,000 cash. Dec. 1 Purchased for $240,000 all of the equipment formerly owned by Rent-It. Paid $133,000 cash and issued a one-year note payable for $107,000. The notes, plus all 12-months of accrued interest, are due 30 November 2013. Dec. 1 Paid $10,500 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 $8,500 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, $4,500. Dec. 15 Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to $18,900, of which $12,600 was received in cash. Dec. 17 Purchased on account from Earth Movers Limited, $700 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 15 December. Dec. 26 Rented a backhoe to Mission Landscaping at a price of $280 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, $4,500. Dec. 27 Paid the account payable to Earth Movers Limited, $700. Dec. 28 Declared a dividend of 10 cents per share, payable on 15 January 2014.
Dec. 29 Susquehanna Equipment Rentals was named, along with Mission Landscaping and Collier Construction, as a co-defendant in a $26,000 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 26 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 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 $8,760. This policy protects the company against liability for injuries and property damage caused by its equipment. However, the policy goes into effect on 1 January 2014, and affords no coverage for the injuries sustained by Kevin Davenport on 26 December. 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 $20,900, of which $15,900 was received in cash. Data for Adjusting Entries a. The advance payment of rent on 1 December 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 31 December are estimated at $610. e. During December, the company earned $4,600 of the rental fees paid in advance by McNamer Construction Co.on 8 December. f. As of 31 December, six days' rent on the backhoe rented to Mission Landscaping on 26 December has been earned. g. Salaries earned by employees since the last payroll date (26 December) amounted to $1,100 at month- end. h. It is estimated that the company is subject to an income tax rate of 40 percent of profit before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable in 2014.
Prepare closing entries and post to ledger accounts. (Do not round intermediate calculations. Omit the "$" sign in your response.) General Journal Debit Credit Date Dec. 31 (Click to select) (Click to select) 31 (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) 31 (Click to select) (Click to select) 0 0 31 (Click to select) (Click to select)
Post the entries into the following ledger accounts. (Record the transactions in the given order. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) GENERAL LEDGER Cash Credit Date Dec. Debit 300000 Balance 300000 1 0 1 0 133000 177000 1 0 10500 156500 8 8500 0 165000 12 0 4500 160500 15 12600 0 173100 23 2400 0 175500 26 0 4500 171000 27 0 700 170300 29 15900 0 186200 31 0 8760 177440 Accounts Receivable Credit Date Dec. 15 Debit 6300 Balance 6300 0 23 0 2400 3900 31 5000 0 8900 31 -
Prepaid Rent Credit Date Debit Balance Dec. 1 10500 0 10500 31 0 3500 7000 Unexpired Insurance Date Debit Credit Balance Dec. 29 Office Supplies Credit Date Debit Balance Dec. 4 1200 0 1200 31 0 590 610 Rental Equipment Credit Date Debit Balance Dec. 1 Accumulated Depreciation: Rental Equipment Debit Credit Date Balance - Dec. 31 Date Debit Notes Payable Credit 107000 Balance Dec. 1 0 107000
Date Debit Accounts Payable Credit 1200 Balance Dec. 4 0 1200 17 0 700 1900 27 700 0 1200 31 Interest Payable Credit Date Debit Balanca Dec. 31 Salaries Payable Credit Debit Balance Date Dec. 31 Debit Date Dec. 28 Dividends Payable Credit 3000 Balance 3000 0 Date Debit Unearned Rental Fees Credit 8500 Balance Dec. 8 0 8500 31 6280 0 2220
Income Taxes Payable Credit Date Debit Balance Dec. 31 Date Debit Share Capital Credit 300000 Balance Dec. 1 0 300000 Retained Earnings Credit Date Debit Balance Dec. 31 133000 0 133000 31 107000 0 240000 Dividends Credit Date Debit Balance Dec. 28 = 31 Income Summary Credit Date Debit Balance Dec. 31 31 E E E 31
Rental Fees Earned Credit Date Debit Balance Dec. 15 0 18900 18900 31 0 15900 34800 31 0 5000 39800 31 0 6280 46080 31 Salaries Expense Credit Date Balance Debit 4500 Dec. 12 0 4500 450 0 9000 31 1100 0 10100 31 Maintenance Expense Credit Date Debit Balance Dec. 17 700 0 700 30 Utilities Expense Credit Date Debit Balance 610 Dec. 31 610 0 31
Rent Expense Credit Debit Balance Date Dec. 31 E E = 31 Office Supplies Expense Credit Date Debit Balance Dec. 31 = E 31 Depreciation Expense Credit Date Debit Balance Dec. 31 - E 31 Interest Expense Credit Date Debit Balance Dec. 31 = E 31 Income Taxes Expense Credit Debit Balance Date Dec. 31 = 31
Prepare a statement of changes in equity for the year ended December 31. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) SUSQUEHANNA EQUIPMENT RENTALS Statement of Changes in Equity For the Year Ended December 31, 2013 Retained earnings, December 1, 2013 $ (Click to select) Subtotal (Click to select) Retained earnings, December 31, 2013 $
Prepare a statement of financial position (in report form) as at December 31. (Input all amounts as positive values. Be sure to list the assets and liabilities in order of their liquidity. Omit the "$" sign in your response.) SUSQUEHANNA EQUIPMENT RENTALS Statement of financial position December 31, 2013 Assets (Click to select) $ (Click to select) (Click to select) . (Click to select) (Click to select) (Click to select) (Click to select) Total Assets $
Liabilities & Equity Liabilities: (Click to select) $ (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) Total Liabilities $ Shareholders' equity: (Click to select) $ (Click to select) Total Shareholders' Equity 日吕 $ Totallinhilitine and Charahaldarel Caliit c
Prepare an after-closing trial balance as of December 31. (The items in the Trial Balance should be grouped as follows: Assets in order of their liquidity), Liabilities (in order of their liquidity) and Equity. Omit the "$" sign in your response.) SUSQUEHANNA EQUIPMENT RENTALS After-Closing Trial Balance December 31, 2013 Debit Credit $ Cash Accounts receivable Prepaid rent Unexpired insurance Office supplies Rental equipment Accumulated depreciation: Rental equipment (Click to select) (Click to select) Unearned rental fees (Click to select) Interest payable Salaries payable Income taxes payable Share capital Retained earnings $ $ Totals