On December 1, Year 1, 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 of its first year of operations, the corporation entered into the following transactions.

Data for Adjusting Entries in Year 1

1. The advance payment of rent on December 1 covered a period of three months.

2. The annual interest rate on the note payable to Rent-It is 6 percent.

3. The rental equipment is being depreciated by the straight-line method over a period of eight years. Any salvage value at the end of its useful life is expected to be negligible and immaterial.

4. Office supplies on hand at December 31 are estimated at $650.

5. During December, the company earned $4,200 of the rental fees paid in advance by McNamer Construction Company on December 8.

6. As of December 31, six days’ rent on the backhoe rented to Mission Landscaping on December 26 has been earned.

7. Salaries earned by employees since the last payroll date (December 26) amounted to $1,700 at month-end.

8. 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

On December 1, Year 1, 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 of its first year of operations, the corporation entered into the following transactions.

Data for Adjusting Entries in Year 1

1. The advance payment of rent on December 1 covered a period of three months.

2. The annual interest rate on the note payable to Rent-It is 6 percent.

3. The rental equipment is being depreciated by the straight-line method over a period of eight years. Any salvage value at the end of its useful life is expected to be negligible and immaterial.

4. Office supplies on hand at December 31 are estimated at $650.

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

6. As of December 31, six days’ rent on the backhoe rented to Mission Landscaping on December 26 has been earned.

7. Salaries earned by employees since the last payroll date (December 26) amounted to $1,800 at month-end.

8. It is estimated that the company is subject to a combined federal and state income tax rate of 30 percent of income before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable in Year 2.

Required information

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On December 1, Year 1, 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 of its first year of operations, the corporation entered into the following transactions.

Data for Adjusting Entries in Year 1

1. The advance payment of rent on December 1 covered a period of three months.

2. The annual interest rate on the note payable to Rent-It is 6 percent.

3. The rental equipment is being depreciated by the straight-line method over a period of eight years. Any salvage value at the end of its useful life is expected to be negligible and immaterial.

4. Office supplies on hand at December 31 are estimated at $700.

5. During December, the company earned $3,900 of the rental fees paid in advance by McNamer Construction Company on December 8.

6. As of December 31, six days’ rent on the backhoe rented to Mission Landscaping on December 26 has been earned.

7. Salaries earned by employees since the last payroll date (December 26) amounted to $2,000 at month-end.

8. 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.

Below is the data for Troy Equipment Rentals. On December 1, Year 1, Benjamin and Josefa Garcia formed a corporation called Troy Equipment Rentals. The new corporation was able to begin operations immediately by purchasing the assets and taking over an equipment rental company that was going out of business. Troy Equipment uses the following accounts. Cash Capital Stock Accounts Receivable Retained Earnings Prepaid Rent Dividends Unexpired Insurance Income Summary Office Supplies Rental Fees Earned Rental Equipment Salaries Expense Accumulated Depreciation: 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 Income Taxes Payable The corporation performs adjusting entries monthly. Closing entries are performed annually on December 31. During December, the corporation recorded the following transactions. Dec. 1 Issued to Benjamin and Josefa 21,000 shares of capital stock in exchange for a total of $210,000 cash. Dec. 1 Purchased for $249,600 all of the equipment formerly owned by Rent-It-All. Paid $134,000 cash and issued a 1-year note payable for $115,600. The note, plus all 12 months of accrued interest, are due November 30, Year 2. Dec. 1 Paid $9,600 to Patel Realty as three months’ advance rent on the rental yard and office formerly occupied by Rent-It-All. Dec. 4 Purchased office supplies on account from Modern Office Co., $1,900. Payment due in 30 days. These supplies are expected to last for several months Dec. 8 Received $8,600 cash as advance payment on equipment rental from LFG Construction Company. Dec. 12 Paid salaries for the first two weeks in December, $5,200. Dec. 15 Excluding the LFG advance, equipment rental fees earned during the first 15 days of December amounted to $18,800, of which $12,600 was received in cash. Dec. 17 Purchased on account from Earth Movers, Inc., $800 in parts needed to repair a rental tractor. (Debit an expense account.) Payment is due in 10 days. Dec. 23 Collected $2,500 of the accounts receivable recorded on December 15. Dec. 26 Rented a backhoe to Mission Landscaping at a price of $300 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., $800. Dec. 28 Declared a dividend of 10 cents per share, payable on January 15, Year 2. Dec. 29 Troy Rentals was named, along with Mission Landscaping and Collier Construction, as a co-defendant in a $23,000 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: You will need to determine of any entry is required) Dec. 29 Purchased a 12-month public liability insurance policy for $8,880. This policy protects the company against liability for injuries and property damage caused by its equipment. Dec. 31 Received a bill from Universal Utilities for the month of December, $650. Payment is due in 30 days. Dec. 31 Equipment rental fees earned during the second half of December amounted to $20,100, of which $15,700 was received in cash. Data for Adjusting Entries a. The advance payment of rent on December 1 covered a period of three months. b. The annual interest rate on the note payable to Rent-It-All is 6%. c. The rental equipment is being depreciated by the straight-line method over a period of eight years. d. Office supplies on hand at December 31 are estimated at $670. e. During December, the company earned $4,300 of the rental fees paid in advance by LFG Construction Company on December 8. f. As of December 31, six days’ rent on the backhoe rented to Mission Landscaping has been earned. g. Salaries earned by employees since the last payroll date (December 26) amounted to $1,700 at month-end. h. It is estimated that the company is subject to a combined federal and state income tax rate of 40% of income before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable in Year 2. Required: 1. Journalize the December transactions. 2. Create the Trial Balance 3. Create adjusting entries 4. Prepare these three statements: Income Statement, Statement of Retained Earnings and Balance Sheet 5. Prepare an after-closing trial balances as of December 31st. 6. Based on what you see in their statements, if offered the opportunity to purchase stock in this company, would you? Provide three reasons for your decision.

On December 1, Year 1, 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.

Data for Adjusting Entries

1. The advance payment of rent on December 1 covered a period of three months.

2. The annual interest rate on the note payable to Rent-It is 6 percent.

3. The rental equipment is being depreciated by the straight-line method over a period of eight years.

4. Office supplies on hand at December 31 are estimated at $720.

5. During December, the company earned $4,440 of the rental fees paid in advance by McNamer Construction Company on December 8.

6. As of December 31, six days’ rent on the backhoe rented to Mission Landscaping on December 26 has been earned.

7. Salaries earned by employees since the last payroll date (December 26) amounted to $1,680 at month-end.

8. 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.

1-a. Journalize the December transactions. Do not record adjusting entries at this point.

1-b. Prepare the necessary adjusting entries for December.

1-c. Prepare closing entries and post to ledger accounts.

On December 1, Year 1, 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.

Data for Adjusting Entries

1. The advance payment of rent on December 1 covered a period of three months.
2. The annual interest rate on the note payable to Rent-It is 6 percent.
3. The rental equipment is being depreciated by the straight-line method over a period of eight years.
4. Office supplies on hand at December 31 are estimated at $720.
5. During December, the company earned $4,440 of the rental fees paid in advance by McNamer Construction Company on December 8.
6. As of December 31, six days’ rent on the backhoe rented to Mission Landscaping on December 26 has been earned.
7. Salaries earned by employees since the last payroll date (December 26) amounted to $1,680 at month-end.
8. 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 examine the current liabilities on the Balance Sheet and identify those that are definitely determinable and those that are probably estimates. Does the corporation have any liabilities with respect to pensions, vacation pay, or warranties? Please see the notes to the financial statements for details with respect to these liabilities. Please let us know what a contingent liability is and if your company has any contingent liabilities.

Part 2

Employees are subject to taxes withheld from their paychecks. Please indicate the federal taxes that are withheld from most employee paychecks. Please let us know why deductions from employees earnings are classified as liabilities for the employer.

Responses to Instructor

Please check your thread for questions or comments from me and be sure to provide a comprehensive response, as requested.

Responses to Classmates

When responding to classmates this week, please select two of the taxes listed below and let them know whether those taxes generally apply to employees only, employers only, or both employees and employers:

Federal Income Tax

Medicare Tax

Social Security Tax

Federal Unemployment Compensation Tax

State Unemployment Compensation Tax

Last year, Jimmy graduated  from First City  University and received USD 5,000 from his father as a graduation gift. Jimmy, , recently heard from a friend who earns a profit from investing in the bond market during this pandemic time.

JImmy does not know much about investing or how people actually “make money by investing”. He asked you to help him in making a wise investment plan.

Required:

1. Before investing any money, explain to Jimmy about the risk involved.

2. Calculate the expected rate of return Jimmy would receive if he buys bonds in Eplas bond. Eplas bond is a 15-year, USD1,000 par value bond that pays 5.5 percent interest annually. The market price of the bond is USD1,085.  

3. Determine the value of the bond given Jimmy required rate of return is 7 percent.

4. Jimmy’s father, Mr.Marc is valuing an investment that will pay him USD12,000 the first year, USD14,000 the second year, USD17,000 the third year, USD19,000 the fourth year, USD23,000 the fifth year, and USD29,000 the sixth year (all payments are at the end of each year). Determine the value of the investment to Mr.Marc now if the appropriate annual discount rate is 11%.

Under ordinary circumstances: For all babies born in the entire global population, the proportion of male births tends to be consistently a bit higher, than the proportion of female births (Source: WHO - World Health Organization).

In fact: For a randomly sampled individual birth from the global population, the probability that the baby's sex will be male is approximately 51.22%.

Imagine that we will randomly record the sex outcome at birth for 25 future individual babies from the global population.

We will let random variable X stand for the total number of male births in our sample.

In this scenario, what is the numerical value of E(X)?

Round to one digit past the decimal point, and state just the number part of your answer (no units).

In this same scenario:

What is the numerical value of SD(X)?

Round to one digit past the decimal point, and state just the number part of your answer (no units).

In this same scenario:

What is the approximate value of P(X≤11) ?

Write your answer as a percentage value, and round to three digits after the decimal point. Include a percent symbol after your answer (no spaces).

In this same scenario:

What is the approximate value of P(X>11) ?

Write your answer as a percentage value, and round to three digits after the decimal point. Include a percent symbol after your answer (no spaces).

An American company sells merchandise on account to a Swiss company for CHF 50,000 on 1/12/2019 when the rate was 1 CHF = 0.9 USD. On 31/12/2019 the rate was 1 CHF = 0.96 USD. On 25/1/2020 the Swiss company pays its obligation to the US company (the rate was 1 CHF = 1.01 USD), which keeps the foreign cash it and converts the amount to US dollars on 10/2/2020, when the rate was 1 CHF = 0.99 USD. Required: Provide the journal entries on each of the above mentioned dates (Note: CHF means Swiss franc). NOTE: IF YOU CANNOT CLEARLY WRITE THE JOURNAL ENTRIES LIKE YOU WOULD ON A PAPER EXAM, PLEASE MENTION dr OR cr NEAR EACH ACCOUNT IN THE JOURNAL ENTRY AS APPROPRIATE.