On 1 December 2013, John and Patty Driver formed a corporation called Susquehann

Question

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 Shere Capitel Retained Earnings Accounts Receiveble Prepaid Ret Income Summary Osice Supplies Rental Equipment Notes Poyable Accounts Payable nterest Payable Salares Payable owidends Payable Unearned Rental Fees income Taxes Poyable Utiies Expense Rent Expense Office Supplies Expeme Depreciation Expense Interest txpense Income Tanes Expense The corporation performs adjusting entries monthly. Closing entries are performed annually on 31 December. During December, the corporation entered into the following transactions: OIssued to John and Patty Driver 30,000 new shares in exchange for a total of $300,000 cash. Purchased for $220,800 all of the equipment formerly owned by Rent-lt. Paid $135,000 cash and issued a one-year note payable for $85,800. The notes, plus all 12-months of accrued interest, are due 30 November 2013. Paid $10,500 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 $1,700. Payment due in 30 days. (These supplies are expected to last for several months; debit the Office Supplies asset account.) Received $8,200 cash as advance payment on equipment rental from McNamer Construction Company. Credit Unearned Rental Fees.) DPaid salaries for the first two weeks in December, $5,200 Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to $18,400, of which $12.400 was received in cash. Purchased on account from Earth Movers Limited, $800 in parts needed to repair a rental tractor. (Debit an expense account.) Payment is due in 10 days. Dec. 23 Collected $2,300 of the accounts receivable recorded ont5 0c 26Rented a backhoe to Mission Landscaping at a price of $340 per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two or three weeks. 26 Paid biweekly salaries, $5,200.

Explanation / Answer

Answer is as below

1) Jounal entries.

Ledger Account

Date Particulars Dr Cr 1-Dec Cash 300000 1-Dec    Share capital 300000 1-Dec Rental Equipment 220800 1-Dec Cash 135000 1-Dec Notes payable 85800 1-Dec Prepaid rent 10500 1-Dec    Cash 10500 4-Dec Office supplies 1700 4-Dec    Account payable 1700 8-Dec Cash 8200 8-Dec Unearned rental 8200 12-Dec Salaries 5200 12-Dec Cash 5200 15-Dec Account receivable 6000 15-Dec Cash 12400 15-Dec Rental Fees earned 18400 17-Dec Maintenance exps 800 17-Dec     Accounts payable 800 23-Dec Cash 2300 23-Dec Account receivable 2300 26-Dec Account receivable 2040 26-Dec Rental Fees earned 2040 26-Dec Salaries 5200 26-Dec Cash 5200 27-Dec Accounts payable 800 27-Dec Cash 800 28-Dec Dividend 300 28-Dec    Dividend Payable 300 29-Dec Unexpired Insurance 9120 29-Dec     Cash 9120 31-Dec Utilities 670 31-Dec     Accounts payable 670 31-Dec Account receivable 4400 31-Dec Cash 15600 31-Dec Rental Fees earned 20000 31-Dec Rent 3500 31-Dec Prepaid rent        3500 31-Dec Interest Exps 429 31-Dec     Interest Payable 429 31-Dec Depreciation 2300 31-Dec Accumulated Dep 2300 31-Dec Closing stock 700 31-Dec    Profit & Loss 700 31-Dec Unearned rental 4400 31-Dec Rental Fees earned 4400 31-Dec Salaries 1300 31-Dec Salaries Payable 1300 31-Dec Income Tax 7242 Income tax payable 7242

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