Prepare a balance sheet (in report form) as of December 31. (Amounts to be deducted should be indicated by a minus sign. Round your final answers to the nearest whole dollar.)
Prepare a balance sheet (in report form) as of December 31. (Amounts to be deducted should be indicated by a minus sign. Round your final answers to the nearest whole dollar.)
Prepare a balance sheet (in report form) as of December 31. (Amounts to be deducted should be indicated by a minus sign. Round your final answers to the nearest whole dollar.)
Prepare a balance sheet (in report form) as of December 31. (Amounts to be deducted should be indicated by a minus sign. Round your final answers to the nearest whole dollar.)
Transcribed Image Text:Required Information
[The following information applies to the questions displayed below.]
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.
Cash
Accounts Receivable
Prepaid Rent
Unexpired Insurance
Office Supplies
Rental Equipment
Accumulated Depreciation: Rental
Equipment
Notes Payable
Accounts Payable
Interest Payable
Salaries Payable
Dividends Payable
Unearned Rental Fees
Incone Taxes Payable
Capital Stock
Retained Earnings
Dividends
Income Summary
Rental Fees Earned
Salaries Expense
Maintenance Expense
Utilities Expense
Rent Expense
Office Supplies Expense
Depreciation Expense
Interest Expense
Income Taxes Expense
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.
Dec. 1 Issued to John and Patty Driver 21,000 shares of capital stock in exchange for a total of $210,000 cash.
Dec. 1 Purchased for $192,800 all of the equipment formerly owned by Rent-It. Paid $131,000 cash and issued a 1-year
note payable for $61,000. 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., $1,300. Payment due in 30 days. (These supplies are
expected to last for several months; debit the Office Supplies asset account.)
Dec. 8 Received $8,400 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned
Rental Fees.)
Dec.12 Paid salaries of $5,108 for the first two weeks in December.
Dec.15 Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to
$18,780, of which $12,100 was received in cash.
Dec.17 Purchased on account from Earth Movers, Inc., $800 in parts needed to perform basic maintenance on a rental
tractor. Payment is due in 10 days.
Dec.23 Collected $2,288 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, $5,100.
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 Susquehanna Equipment Rentals was named, along with Mission Landscaping and Collier Construction, as a co-
defendant in a $28,000 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, $688. Payment is due in 30 days.
Dec.31 Equipment rental fees earned during the second half of December amounted to $20,580, of which $16,808 was
received in cash.
Data for Adjusting Entries In Year 1
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 is 6 percent.
c. 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.
d. Office supplies on hand at December 31 are estimated at $610.
e. During December, the company earned $4,400 of the rental fees paid in advance by McNamer Construction Company
on December 8.
f. As of December 31, six days' rent on the backhoe rented to Mission Landscaping on December 26 has been earned.
g. Salaries earned by employees since the last payroll date (December 26) amounted to $1,800 st month-end.
h. 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.
Transcribed Image Text:Rental equipment
Total assets
Liabilities:
Total liabilities
Stockholders' equity:
SUSQUEHANNA EQUIPMENT RENTALS
Balance Sheet
December 31, Year 1
Assets
Liabilities & Stockholders' equity
Total stockholders' equity
Total liabilities and stockholders' equity
S
S
S
S
0
0
0
0
To
0
Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.
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![Required Information
[The following information applies to the questions displayed below.]
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.
Cash
Accounts Receivable
Prepaid Rent
Unexpired Insurance
Office Supplies
Rental Equipment
Accumulated Depreciation: Rental
Equipment
Notes Payable
Accounts Payable
Interest Payable
Salaries Payable
Dividends Payable
Unearned Rental Fees
Incone Taxes Payable
Capital Stock
Retained Earnings
Dividends
Income Summary
Rental Fees Earned
Salaries Expense
Maintenance Expense
Utilities Expense
Rent Expense
Office Supplies Expense
Depreciation Expense
Interest Expense
Income Taxes Expense
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.
Dec. 1 Issued to John and Patty Driver 21,000 shares of capital stock in exchange for a total of $210,000 cash.
Dec. 1 Purchased for $192,800 all of the equipment formerly owned by Rent-It. Paid $131,000 cash and issued a 1-year
note payable for $61,000. 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., $1,300. Payment due in 30 days. (These supplies are
expected to last for several months; debit the Office Supplies asset account.)
Dec. 8 Received $8,400 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned
Rental Fees.)
Dec.12 Paid salaries of $5,108 for the first two weeks in December.
Dec.15 Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to
$18,780, of which $12,100 was received in cash.
Dec.17 Purchased on account from Earth Movers, Inc., $800 in parts needed to perform basic maintenance on a rental
tractor. Payment is due in 10 days.
Dec.23 Collected $2,288 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, $5,100.
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 Susquehanna Equipment Rentals was named, along with Mission Landscaping and Collier Construction, as a co-
defendant in a $28,000 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, $688. Payment is due in 30 days.
Dec.31 Equipment rental fees earned during the second half of December amounted to $20,580, of which $16,808 was
received in cash.
Data for Adjusting Entries In Year 1
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 is 6 percent.
c. 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.
d. Office supplies on hand at December 31 are estimated at $610.
e. During December, the company earned $4,400 of the rental fees paid in advance by McNamer Construction Company
on December 8.
f. As of December 31, six days' rent on the backhoe rented to Mission Landscaping on December 26 has been earned.
g. Salaries earned by employees since the last payroll date (December 26) amounted to $1,800 st month-end.
h. 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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1bd8ec0a-b872-4dca-aa8f-a8a91637a935%2F82f1a445-d31c-45b6-8f12-46ed0db9a5ff%2F8lwri7m_processed.png&w=3840&q=75)
