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****PLEASE OPEN IMAGE IN ANOTHER TAB*****HIT RIGHT CLICK AND OPEN IN NEW TAB; please fill out the rest of the chart below
On December 1, 2015, 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:
The corporation performs adjusting entries monthly. Closing entries are performed annually on December 31. During December, the corporation entered into the following transactions:
Issued to John and Patty Driver 20,000 shares of capital stock in exchange for a total of $200,000 cash.
Purchased for $240,000 all of the equipment formerly owned by Rent-It. Paid $140,000 cash and issued a one-year note payable for $100,000. The note, plus all 12-months of accrued interest, are due November 30, 2016.
Paid $12,000 to Shapiro Realty as three months’ advance rent on the rental yard and office formerly occupied by Rent-It.
Purchased office supplies on account from Modern Office Co., $1,000. Payment due in 30 days. (These supplies are expected to last for several months; debit the Office Supplies asset account.)
Received $8,000 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned Rental Fees.)
Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to $18,000, of which $12,000 was received in cash.
Purchased on account from Earth Movers, Inc., $600 in parts needed to repair a rental tractor. (Debit an expense account.) Payment is due in 10 days.
Rented a backhoe to Mission Landscaping at a price of $250 per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two or three weeks.
Susquehanna Equipment Rentals was named, along with Mission Landscaping and Collier Construction, as a co-defendant in a $25,000 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.)
Purchased a 12-month public-liability insurance policy for $9,600. 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, 2016, and affords no coverage for the injuries sustained by Kevin Davenport on December 26.
Received a bill from Universal Utilities for the month of December, $700. Payment is due in 30 days.
Equipment rental fees earned during the second half of December amounted to $20,000, of which $15,600 was received in cash.
On December 1, 2015, 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:
SUSQUEHANNA EQUIPMENT RENTALS Worksheet December 31, 2015 Trial Balance Adjustments Balance Sheet Adjusted Trial Balance Debit Income Statement Debit Credit Debit Credit Credit Debit Credit Debit Credit Rental fees earned Salaries expense Maintenance expense Utilities expense Rent expense Interest expense Depreciation expense Office supplies expense Income taxes expense Net income TotalsExplanation / Answer
If any doubt please comment.
working Accounts Title Dr Cr Cash $200,000 Capital stock $200,000 Rental Equipment $240,000 Cash $140,000 Notes Payable 100000 Prepaid Rent $12,000 Cash $12,000 Office Supplies $1,000 Accounts Payable $1,000 Cash $8,000 Unearned Rental fees $8,000 Salaries expenses $5,200 Cash $5,200 Cash $12,000 Accounts Receivable 6000 Rental fees earned 18000 Maitanence Expenses $600 Accounts payable $600 Cash $2,000 Accounts Receivable $2,000 No entry Salaries expenses $5,200 Cash $5,200 Accounts payable $600 Cash $600 Cash dividend $2,000 Dividend payable (20000*.1) $2,000 No entry Unexpired Insurance $9,600 Cash $9,600 Utilities expenses $700 Accounts payable $700 Cash $15,600 Accounts Receivable 4400 Rental fees earned 20000 Adjusting entries Rent expenses $4,000 Prepaid Rent (12000/3) $4,000 Interest expenses $500 Interest payable (100000*6%*1/12) $500 Depreciation expenses $2,500 Accumulated depreciation: Rental equipmen $2,500 (240000/8*1/12) Supples expenses $400 Office Supplies $400 Unearned Rental fees $3,700 Rental fees earned $3,700 Accounts Receivable (6*250) $1,500 Rental fees earned $1,500 Salaries expenses $1,400 Salaries payable $1,400 Income Tax expenses $9,080.0 Income Tax payable $9,080.0 working Income statement Rental fees earned $43,200 Less: Salaries expenses $11,800 Maitanence Expenses $600 Utilities expenses $700 Rent expenses $4,000 Depreciation expenses $2,500 Supples expenses $400 Interest expenses $500 Total expenses $20,500 Income before taxes $22,700 Less: income tax 40% $9,080.0 Net income $13,620.0Related Questions
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