Question

Dec. 1 Issued to John and Patty Driver 27,000 shares of capital stock in exchange for a total of $270,000 cash. Dec. 1 Purchased for $201,600 all of the equipment formerly owned by Rent-It. Paid $138,000 cash and issued a 1-year note payable for $63,600. The note, plus all 12 months of accrued interest, are due November 30, Year 2. Dec. 1 Paid $9,300 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., $1,200. Payment due in 30 days. (These supplies are expected to last for several months; debit the Office Supplies asset account.) Dec. 8 Received $8,500 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, $4,900. Dec. 15 Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to $18,600, of which $12,100 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 $2,200 of the accounts receivable recorded on December 15. Dec. 26 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, $4,900. 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, Year 2. Dec. 29 Susquehanna Equipment Rentals was named, along with Mission Landscaping and Collier Construction, as a co-defendant in a $24,000 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.) Dec. 29 Purchased a 12-month public liability insurance policy for $9,120. 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, Year 2, and affords no coverage for the injuries sustained by Kevin Davenport on December 26. Dec. 31 Received a bill from Universal Utilities for the month of December, $680. Payment is due in 30 days. Dec. 31 Equipment rental fees earned during the second half of December amounted to $20,600, of which $15,900 was received in cash. Data for Adjusting Entries The advance payment of rent on December 1 covered a period of three months. 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 $620. During December, the company earned $4,600 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 $1,900 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 Year 2.
Please (Debit and Credit each individual date)

Answer 1

In the books of ....:

Date	Account Titles	Debit	Credit
		$	$
Dec 1	Cash	270,000
	Common Stock		270,000
Dec 1	Rental Equipment	201,600
	Note Payable		63,600
	Cash		138,000
Dec 3	Prepaid Rent	9,300
	Cash		9,300
Dec 4	Office Supplies	1,200
	Accounts Payable		1,200
Dec 8	Cash	8,500
	Unearned Rental Fees		8,500
Dec 12	Salaries Expense	4,900
	Cash		4,900
Dec 15	Cash	12,100
	Accounts Receivable	6,500
	Rental Revenue		18,600
Dec 17	Maintenance Expense	600
	Accounts Payable		600
Dec 23	Cash	2,200
	Accounts Receivable		2,200
Dec 26	No entry required	0	0
Dec 26	Salaries Expense	4,900
	Cash		4,900
Dec 27	Accounts Payable	600
	Cash		600
Dec 28	Dividends	2,700
	Dividends Payable		2,700
Dec 29	No entry required	0	0
Dec 29	Prepaid Insurance	9,120
	Cash		9,120
Dec 31	Utilities Expense	680
	Accounts Payable		680
Dec 31	Cash	15,900
	Accounts Receivable	4,700
	Rental Revenue		20,600

Adjusting entries:

Adjustment #	Account Titles	Debit	Credit
December 31		$	$
a.	Rent Expense ( $ 9,300 / 3 )	3,100
	Prepaid Rent		3,100
b.	Interest Expense ( $ 201,600 x 6 % x 1/12 )	1,008
	Interest Payable		1,008
c.	Depreciation Expense ( $ 201,600 / ( 8 x 12) )	2,100
	Accumulated Depreciation		2,100
d.	Office Supplies Expense	580
	Office Supplies		580
e.	Unearned Rental Fees	4,600
	Rental Revenue		4,600
f.	Accounts Receivable	1,500
	Rental Revenue		1,500
g.	Salaries Expense	1,900
	Salaries Payable		1,900
h.	Income Tax Expense	10,213
	Income Taxes Payable		10,213