In September, the company entered the following transactions:   Sept. 1 Issued common shares to Tony Ferria and other investors in exchange for                       $100,000 cash.   Sept 1  Paid $9,000 to Wellington Realty as three months’ advance rent on the rental yard and     office formerly occupied by Rent-It   Sept 1  Purchased for $180,000 all the equipment formerly owned by Rent-It.  Paid $70,000         cash and issued a one-year note payable for $110,000, plus interest at the annual rate of 9%.  This rental equipment is estimated to have a 10-year useful life.   Sept 4  Purchased office supplies on account from Modern Office Co., $1,630.      Payment due in 30 days.  (These supplies are expected to last for several             months.)   Sept 8  Received $10,000 cash from McFadden Construction Co. as advance payment for             equipment rental.   Sept 12            Paid salaries for the first two weeks in September, $3,600. Sept 15            Excluding the McFadden advance, equipment rental fees earned during the first 15 days   of September amounted to $6,100, of which $5,300 was received in cash and $800 was     an account receivable.   Sept 17            Purchased on account from Earth Movers, Inc., $340 in parts needed to repair a rental       tractor.  Payment is due in 10 days.   Sept 23            Collected $210 of the accounts receivable recorded on September 15.   Sept 26            Rented a backhoe to Mission Landscaping at a price of $100 per day, to be paid when       the backhoe is returned.  Mission Landscaping expects to keep the backhoe for about two or three weeks.   Sept 26            Paid biweekly salaries, $3,600.   Sept 27            Paid the account payable to Earth Movers, Inc., $340.   Sept 28       Paid dividends of $2,000 cash.   Sept 30            Received a bill for utilities expense for the month of September, $270.  Payment is due     in 30 days.   Sept 30            Cash received from equipment rental during the second half of September, $6,450.   The information available on September 30 is as follows:  the office supplies on hand are estimated at $1,100; $4,840 of the advance payment from McFadden Construction Co. has been earned; salaries earned by employees since the last payroll are $900.   Instructions:   Prepare journal entries for the above transactions in September and post the transactions to the ledger, using T-accounts and adding any new accounts  which you need.  You may omit narratives to the journal entries. Prepare adjusting journal entries and post the adjustments to the T-accounts, adding any new accounts which you need. Note  that some of the adjusting entries can be derived from the information provided in the  various transactions  from   September  1 to September 30,  in addition to the information available on September 30. Prepare a statement of earnings (income statement) for the month of September in good form. Prepare a statement of retained earnings for the month of September in good form. Prepare a classified statement of financial position (balance sheet) as of September 30 in good Prepare closing entries as of September 30.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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In September, the company entered the following transactions:

 

Sept. 1 Issued common shares to Tony Ferria and other investors in exchange for                       $100,000 cash.

 

Sept 1  Paid $9,000 to Wellington Realty as three months’ advance rent on the rental yard and     office formerly occupied by Rent-It

 

Sept 1  Purchased for $180,000 all the equipment formerly owned by Rent-It.  Paid $70,000         cash and issued a one-year note payable for $110,000, plus interest at the annual rate of 9%.  This rental equipment is estimated to have a 10-year useful life.

 

Sept 4  Purchased office supplies on account from Modern Office Co., $1,630.      Payment due in 30 days.  (These supplies are expected to last for several             months.)

 

Sept 8  Received $10,000 cash from McFadden Construction Co. as advance payment for             equipment rental.

 

Sept 12            Paid salaries for the first two weeks in September, $3,600.

Sept 15            Excluding the McFadden advance, equipment rental fees earned during the first 15 days   of September amounted to $6,100, of which $5,300 was received in cash and $800 was     an account receivable.

 

Sept 17            Purchased on account from Earth Movers, Inc., $340 in parts needed to repair a rental       tractor.  Payment is due in 10 days.

 

Sept 23            Collected $210 of the accounts receivable recorded on September 15.

 

Sept 26            Rented a backhoe to Mission Landscaping at a price of $100 per day, to be paid when       the backhoe is returned.  Mission Landscaping expects to keep the backhoe for about two or three weeks.

 

Sept 26            Paid biweekly salaries, $3,600.

 

Sept 27            Paid the account payable to Earth Movers, Inc., $340.

 

Sept 28       Paid dividends of $2,000 cash.

 

Sept 30            Received a bill for utilities expense for the month of September, $270.  Payment is due     in 30 days.

 

Sept 30            Cash received from equipment rental during the second half of September, $6,450.

 

The information available on September 30 is as follows:  the office supplies on hand are estimated at $1,100; $4,840 of the advance payment from McFadden Construction Co. has been earned; salaries earned by employees since the last payroll are $900.

 

Instructions:

 

  1. Prepare journal entries for the above transactions in September and post the transactions to the ledger, using T-accounts and adding any new accounts  which you need.  You may omit narratives to the journal entries.
  2. Prepare adjusting journal entries and post the adjustments to the T-accounts, adding any new accounts which you need. Note  that some of the adjusting entries can be derived from the information provided in the  various transactions  from   September  1 to September 30,  in addition to the information available on September 30.
  3. Prepare a statement of earnings (income statement) for the month of September in good form.
  4. Prepare a statement of retained earnings for the month of September in good form.
  5. Prepare a classified statement of financial position (balance sheet) as of September 30 in good
  6. Prepare closing entries as of September 30.

 

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