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Presentation/PPT
27/08/2022
On December 1, 2007, John and Patty Driver formed a corporation called Susquehanna Equipment Rentals. The new corporation was able to begin operations immediately by purchasing the asset and taking over the location of Rent-it, an equipment rental company that was going out of business. 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 total of $200,000 cash. Dec.1 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. Dec.1 Paid $12,000 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., $1,000. Payment due in 30 days. (These supplies are expected to last for several month: debit the Office Supplies asset account.) Dec 8 Received $8,000 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, $5,200. Dec 15 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. Dec 17 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. Dec 23 Collected $2,000 of the accounts receivable recorded on December 15. Dec 23 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. Dec 26 Paid biweekly salaries, $5,200. Dec 27 Paid the account payable to Earth Movers, Inc., $600. Dec 28 Declared a dividend of 10 cents per share, payable on January 15, 2008. This event does not required 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 $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, 2008, and affords no coverage for the injuries sustained by Kevin Davenport on December, $700. Data for Adjusting Entries The advance payment of rent on December 31 covered a period of three month. The annual interest rate on the note payable to Rent-It is 6 percent. The rental equipment is being depreciated by the straight-line method over a period of eight years Office supplies on hand at December 31 are estimated at $600. During December, the company earned $3,700 of the rental fees paid in advance by McNamer Construction Co. on December 8. As of December 31, six days’rent on the backhoe rented to Mission Landscaping on December 23 has been earned Salaries earned by employees since the last payroll date (December 26) amounted to $1,400 at month-end. 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 2008.Prepare a 10 column worksheet for the year ended December 31.
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