On December 1, 2009, John and Patty Driver formed a corporation called Susquehan

Question

On December 1, 2009, 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 Income Taxes Payable Accounts Receivable Capital Stock Prepaid Rent Retained Earnings Unexpired Insurance Dividends Office Supplies Income Summary Rental Equipment Rental Fees Earned Accumulated Depreciation Salaries Expense 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 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 $ 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

Explanation / Answer

Dec 1 Cash 200000

Paid in Capital 200000

Dec 1 Equipment 240000

Cash 140000

Notes payable 100000

Dec1 Cash 12000

Advance rent 12000

Dec4 Office supplies 1000

Modern Office 1000

Dec8 Cash 8000

Unearned Fee rental 8000

Dec12 Salary expenses 5200

Cash 5200

Dec15 Cash 12000

Receivables 6000

Revenue earned 18000

Dec17 Repair expenses 600

Earth Movers Inc 600

Dec23 Cash 2000

Receivables 2000

Dec26 Salary expenses 5200

Cash 5200

Dec27 Earth Movers Inc 600

Cash 600

Dec28 Dividends 20000

Dividends payable 20000

Dec29 Pre paid Insurance 9600

Cash 9600

Adjusting Entries

Dec 31 Advance rent 4000

Rent 4000

Dec31 Interest expenses 5000

Interest payable 5000

Dec31 Depreciation 2500

Equipment 2500

Dec31 Office supplies expenses 400

Office supplies 400

Dec31 Unearned Fee rental 3700

Fees earned 3700

Dec31 Salary expenses 1400

Salary payable 1400

Cash Date Desc Amount Date Desc Amount 01-Dec Paid in capital 200000 01-Dec Equipment 140000 08-Dec Uneraned fee rental 8000 01-Dec Advance Rent 12000 15-Dec Revenue earned 12000 12-Dec Salary Expenses 5200 23-Dec Receivables 2000 26-Dec Salary Expenses 5200 27-Dec Earth Movers 600 29-Dec Pre paid insurance 9600 31-Dec Closing balance 49400 222000 222000 Paid in capital Date Desc Amount Date Desc Amount 01-Dec Cash 200000 Equipment Date Desc Amount Date Desc Amount 01-Dec Cash 140000 31-Dec Depreciation 2500 01-Dec Notes payable 100000 31-Dec Closing balance 237500 240000 240000 Notes payable Date Desc Amount Date Desc Amount 01-Dec Equipment 100000 Office Supplies Date Desc Amount Date Desc Amount 04-Dec Modern Office 1000 31-Dec Office supplies expenses 400 Modern Office Date Desc Amount Date Desc Amount 04-Dec Office Supplies 1000 Unearned fee rental Date Desc Amount Date Desc Amount 31-Dec Revenue Earned 3700 08-Dec Cash 8000 31-Dec Closing balance 4300 8000 8000 Salary Expenses Date Desc Amount Date Desc Amount 12-Dec Cash 5200 31-Dec P/L account 11800 26-Dec Cash 5200 31-Dec Salary payable 1400 11800 11800 Receivables Date Desc Amount Date Desc Amount 15-Dec Revenue earned 6000 23-Dec Cash 2000 31-Dec Closing balance 4000 6000 6000 Revenue Earned Date Desc Amount Date Desc Amount 31-Dec P/L account 21700 15-Dec Cash 12000 15-Dec Receivables 6000 31-Dec Unearned fee rental 3700 21700 21700 Earth Movers Inc Date Desc Amount Date Desc Amount 27-Dec Cash 600 17-Dec Repair Expenses 600 Repair Expenses Date Desc Amount Date Desc Amount 17-Dec Earth Movers Inc 600 Dividends Date Desc Amount Date Desc Amount 28-Dec Dividends Payable 20000 Dividends Payable Date Desc Amount Date Desc Amount 28-Dec Dividends 20000 Pre paid Insurance Date Desc Amount Date Desc Amount 29-Dec Cash 9600 Rent Date Desc Amount Date Desc Amount 31-Dec Advance rent 4000 Advance Rent Date Desc Amount Date Desc Amount 31-Dec rent 4000 Interest expenses Date Desc Amount Date Desc Amount 31-Dec Interest payable 5000 Interest payable Date Desc Amount Date Desc Amount 31-Dec Interest expenses 5000 Depreciation Date Desc Amount Date Desc Amount 31-Dec Equipment 2500 Office supplies expenses Date Desc Amount Date Desc Amount 31-Dec Office supplies 400 Salary Payable Date Desc Amount Date Desc Amount 31-Dec Salary 1400

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