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a.
General Journal December Daily Transactions 2013 Dec 1 Cash Share Capital Owner invested cash in the business. 1 Rental Equipment Cash Notes Payable Purchased equipment from Rent-it. Note payable is due in one year. 1 Prepaid Rent Cash Paid three months' rent in advance to Shapiro Realty. 4 Office Supplies Accounts Payable Purchased supplies on account; payment due in 30 days. 8 Cash Unearned Rental Fees Received advance payment for equipment rental by McNamer Construction Company. 12 Salaries Expense Cash Paid salaries for first two weeks in December. 15 Cash Accounts Receivable Rental Fees Earned To record rental fees earned in first 15 days of December, 17 Maintenance Expense Accounts Payable To record purchase of repair parts on account from Earth Movers Limited; payment due in 10 days. 23 Cash Accounts Receivable Collection of an accounts receivable. 23 (No entry required to record rental of backhoe.) 5,200 5,200 240,000 140,000 100,000 200,000 200,000
12,000 12,000
1,000 1,000
8,000 8,000
600 600
2,000 2,000
Mackenzie Mangels
600 600
2,000 2,000
700 700
Mackenzie Mangels(p.2)
4,000 4,000
500 500
2,500 2,500
= $2,500). 31 Office Supplies Expense Office Supplies To record office supplies used during the month. ($1,000 - $600 = $400) 31 Unearned Rental Fees Rental Fees Earned To record portion of advance payment by McNamer Construction Co. earned during December. 31 Accounts Receivable Rental Fees Earned To record fees earned from Mission Landscaping on backhoe rental (6 days x $250 per day). 31 Salaries Expense Salaries Payable To record accrued salaries payable at month-end. 31 Income Taxes Expense Income Taxes Payable To record income taxes for December [($43,200 $11,800 - $600 - $700 - $4,000 - $400 -$2,500 - $500) x x 40%]. 400 400
3,700 3,700
1,500 1,500
1,400 1,400
9,080 9,080
Mackenzie Mangels(p.3)
Date Dec 15 23 31 31
Explanation
Credit 2,000
Date Dec 1 31
Explanation
Credit 4,000
Date Dec 29
Explanation
Credit
Balance 9,600
Date Dec 4 31
Explanation
Credit 400
Mackenzie Mangels(p.4)
Date Dec 31
Balance 2,500
Date Dec 1
Explanation
Credit 100,000
Balance 100,000
Date Dec 4 17 27 31
Explanation
600
Date Dec 31
Explanation
Credit 500
Balance 500
Mackenzie Mangels(p.5)
Date Dec 28
Explanation
Credit 2,000
Balance 2,000
Date Dec 8 31
Explanation
Credit 8,000
Date Dec 31
Explanation
Credit 9,080
Balance 9,080
Date Dec 1
Explanation
Credit 200,000
Balance 200,000
Mackenzie Mangels(p.6)
Explanation
Credit 2,000
Balance 2,000 0
Date Explanation Dec 31 To close revenue accounts 31 To close expense accounts 31 To close
Credit 43,200
Explanation
43,200
Explanation
Credit
11,800
Mackenzie Mangels(p.7)
Explanation
Credit 700
Balance 700 0
Explanation
Credit 4,000
Balance 4,000 0
Explanation
Credit 400
Balance 400 0
Mackenzie Mangels(p.8)
Explanation
Credit 500
Balance 500 0
Explanation
Credit 9,080
Balance 9,080 0
Mackenzie Mangels(p.9)
Debit
Adjustments* Credit
(f)
(e)
3,700
2,000 500 2,500 1,400 9,080 $ 43,200 11,800 600 700 4,000 500 2,500 400 9,080 29,580 13,620 43,200
$ 349,700 (a) (b) (c) (d) (h) 4,000 500 2,500 400 9,080 $ 23,080
$ 23,080
$ 364,680 $
43,200 $ 43,200
335,100 $ 335,100 $
Profit Totals * Adjustments (a) December rent expense ($12,000 3). (b) December interest expense ($100,000 x 6% x 1/12). (c) December depreciation expense ($240,000 96 months). (d) Office supplies used in December ($1,000 - $600).
(e) Portion of unearned revenue earned in December. (f) Accrued revenue earned in December. (g) Accrued salaries at month-end. (h) Accrued income taxes expense at month-end.
Mackenzie Mangels(p.10)
SUSQUEHANNA EQUIPMENT RENTALS Statement of Changes in Equity For the Year Ended December 31, 2013 Retained earnings, December 1, 2013 Profit Subtotal Less: Dividends Retained earnings, December 31, 2013
Mackenzie Mangels(p.11)
240,000 2,500 $
$ $ $
100,000 1,700 500 1,400 2,000 4,300 9,080 118,980 200,000 11,620 330,600
c.
Notes to the financial statements: Note 1Depreciation policies Depreciation expense in the financial statements is computed by the straight-line method. The estimated useful life of the rental equipment is 8 years. Note 2Maturity dates of liabilities The Companys notes payable consist of a single obligation which matures on November 30, 2014. The maturity value of this note, including interest, will amount to $106,000. Note 3Pending litigation The Company has been named as a co-defendant in a $25,000 personal injury lawsuit. The extent of legal and financial responsibility, if any, cannot be determined at this time.
Mackenzie Mangels(p.12)
13,620 13,620
2,000 2,000
e.
SUSQUEHANNA EQUIPMENT RENTALS After-Closing Trial Balance December 31, 2013 $
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 Income taxes payable Share capital Retained earnings Totals
65,000 9,900 8,000 9,600 600 240,000 $ 2,500 100,000 1,700 500 1,400 2,000 4,300 9,080 200,000 11,620 333,100
333,100
Mackenzie Mangels(p.13)
Mackenzie Mangels(p.14)