Please post the entries into the following ledger accounts On December 1, 2015,

Question

Please post the entries into the following ledger accounts

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.

During December, the company earned $3,700 of the rental fees paid in advance by McNamer Construction Company on December 8.

As of December 31, six days’ rent on the backhoe rented to Mission Landscaping on December 26 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 2016.

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:

Explanation / Answer

Cash 1-Dec 200000 1-Dec 140000 8-Dec 8000 1-Dec 12000 15-Dec 12000 12-Dec 5200 23-Dec 2000 26-Dec 5200 31-Dec 15600 27-Dec 600 29-Dec 9600 ending bal 65000 Capital stock 1-Dec 200000 Notes payable 1-Dec 100000 Rental Equipment 1-Dec $140,000 1-Dec 100000 Ending bal $240,000 Prepaid Rent 1-Dec 12000 a) 4000 end bal 8000 Maitanence Expenses 17-Dec 600 Unexpired Insurance 29-Dec 9600 Rental fees Earned 15-Dec 12000 15-Dec 6000 31-Dec 15600 31-Dec 4400 e) 3700 f 1500 end bal 43200 Depreciation expenses c) 2500 Income tax expense h) 9080 Income tax pauyable h) 9080 Office Supplies 4-Dec 1000 d) 400 end b 600 Accounts payable 27-Dec 600 4-Dec 1000 17-Dec 600 31-Dec 700 end bal 1700 l e 3700 8-Dec 8000 end bal 4300 Salaries expenses 12-Dec 5200 26-Dec 5200 g 1400 end bal 11800 Cash dividend 28-Dec 2000 Accounts Receivable 15-Dec 6000 23-Dec 2000 31-Dec 4400 f 1500 end bal 9900 Utilitees expenses 31-Dec $700 Rent expenses a) 4000 Interest expense b 500 Supplies expenses d) 400 Interest payable b 500

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