Question

On January 1, 2019 Mike and Julie formed a company called Royal Rental, Inc. for operating an equipment rental yard. The new company began 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 company closes its accounts and prepares financial statements at the end of each month. During January the company entered into the following transactions: Data for January Journal Entries: January 1: Mike and Julie opened the business, each.contributing $80,000 in cash to the company and receiving Common Stock in return for their investment. dole CAMAT Steel Co January 1: Purchased equipment for $400,000 from Rent-It, paying $50,000 in cash and taking out a one-year $350,000 note payable at a simple interest rate of 4.8%, payable annually. January 1: Paid $30,000 to Santos Realty as six months' advance rent on the rental yard and office formerly occupied by Rent-it. January 4: Purchased office supplies on account from Modern Office Co. for $410. Payment due in 30 days. (These supplies are expected to last for several months) January 8: Received $8,000 cash as an advance payment on an equipment rental from McBryan Construction Company. January 11: Paid salaries for the first two weeks of January, $9,000. January 15: Excluding the McBryan advance, equipment rental fees earned during the first 15 days of January amounted to $24,800, of which $11,000 was received in cash. Purchased on account from Earth Movers, Inc. $520 in parts needed to repair a rental tractor which was completed on January 18th. Payment is due in 10 days. January 17: January 23: Collected $7,800 of the accounts received recorded January 15th. Paid biweekly salaries totaling $10,400. January 25:

Some of these T accounts might not all be used but I wanted to add them all just to make sure. Which is why the post is a bit long.

Answer 1

Ans.

Journal Entries
Date	Description	Debit	Credit
01-Jan	Cash	160000
	Common Stock		160000
01-Jan	Equipment	400000
	Cash		50000
	note payable		350000
01-Jan	Prepaid Rent	30000
	Cash		30000
04-Jan	Prepaid Supplies	410
	Account Payable		410
08-Jan	Cash	8000
	Uneaned rental revenue		8000
11-Jan	salary expenses	9000
	Cash		9000
15-Jan	Cash	11000
	Account receivable	13800
	rental revenue		24800
17-Jan	repairs expenses	520
	Account Payable		520
23-Jan	Cash	7800
	Account receivable		7800
25-Jan	Cash	10400
	salary expenses		7800
31-Jan	rent expenses	5000
	Prepaid Rent		5000
	(30000 / 6 month)
31-Jan	Interest Expenses	1400
	Accrued Interest		1400
	(350000*4.8%*1/12)

Ledger (only ledger with balance are shown, due to huge file size)

CASH
Particular	Debit	Particular	Credit
Common Stock	160000	Equipment	50000
Uneaned rental revenue	8000	Prepaid Rent	30000
rental revenue	11000	salary expenses	9000
Account receivable	7800	Ending balance	97800
Total	186800	Total	186800
Account receivable
Particular	Debit	Particular	Credit
rental revenue	13800	Cash	7800
		Ending balance	6000
Total	13800	Total	13800
Prepaid Rent
Particular	Debit	Particular	Credit
Cash	30000	rent expenses	5000
		Ending balance	25000
Total	30000	Total	30000
Prepaid Supplies
Particular	Debit	Particular	Credit
Account Payable	410
		Ending balance	410
Total	410	Total	410
Equipment
Particular	Debit	Particular	Credit
Cash	50000
note payable	350000
		Ending balance	400000
Total	400000	Total	400000
Account Payable
Particular	Debit	Particular	Credit
		Prepaid Supplies	410
		repairs expenses	520
Ending balance	930
Total	930	Total	930
Accrued Interest
Particular	Debit	Particular	Credit
		Interest Expenses	1400
Ending balance	1400
Total	1400	Total	1400
Uneaned rental revenue
Particular	Debit	Particular	Credit
		Cash	8000
Ending balance	8000
Total	8000	Total	8000
note payable
Particular	Debit	Particular	Credit
		Equipment	350000
Ending balance	350000
Total	350000	Total	350000
rental revenue
Particular	Debit	Particular	Credit
		Cash	11000
		Account receivable	13800
Ending balance	24800
Total	24800	Total	24800
salary expenses
Particular	Debit	Particular	Credit
		Cash	9000
Ending balance	9000
Total	9000	Total	9000
rent expenses
Particular	Debit	Particular	Credit
Prepaid Rent	5000
		Ending balance	5000
Total	5000	Total	5000
repairs expenses
Particular	Debit	Particular	Credit
Account Payable	520
		Ending balance	520
Total	520	Total	520
interest expenses
Particular	Debit	Particular	Credit
Accrued Interest	1400
Total	1400	Total	0