Question

Sir Rents -A-Lot closes its accounts and prepares financial statements at the end of each onth. During Sept (their first month of operations) they had the following transactions. Date Transaction or Event Sept 1, Year 2 25,000 shares of common stock issued in exchange for $125,000 cash. Sept 1, Year 2 Purchased all of the equipment owned by "MR ALL THUMBS." The equipment that was bought had a fair market value of $300,000, but the price that the equipment was purchased for was $270,000. They signed a three-year 9% note payable and paid $110,000 cash. Sept 1. Year 2 Paid rent to Liacouras Paid rent to Liacouras Realty Company for 3 months of $12,000. They are occupying the same space as "MR ALL THUMBS." Sept 4, Year 2 Purchased from - Office Max-office supplies worth $1,750 on account. Payment terms are 2/10 net 30. They expect that these supplies will last for several months. Sept 5, Year 2 Hired a new secretary/assistant, his annual salary is $32,000 per year plus a benefit package that is annually worth $7,000. Sept 8. Year 2 Received an advance payment from Digger O'Dell Co. $11,000 cash. Use a liability account. Sept 12. Year 2 Paid the salaries for the first two weeks of Sept. $5,250. Sept 15. Year 2 Excluding the advance from Digger O'Dell Company, 510,000 was earned. The amount of cash received was $6,000. The remaining S4000 is recorded as Account Receivable. Sent 17 Year 2 Purchased repair parts from Caterpillar Inc. that are worth $500, Terms are net 10. of the accounts receivable recorded on Sept 15th, $4,000 was collected. Rented a front-end loader to Landscrapers, Inc at a S250 per day rate. Landscrapers, Inc. will settle their account when they return the loader. They expect to keep it about two or three weeks Sept 26. Year 2 Paid the salaries for the two weeks ended Sept. 26. $5,250. Sept 27. Year 2 Paid Caterpillar Inc. in the full amount $500. Sept 28, Year 2 A dividend was declared, which they intend to pay at 0.10 per share by the end of the year Sept 29, Year 2 A child was slightly injured when he fell off of the front-end loader that was rented to Landscrapers Inc. The child is the only son of a lawyer and an orthopedic surgeon. They have filed a lawsuit at S250.000 against both Landscrapers and Sir-Rent-A-Lot. The actual liability for the accident has not yet been determined. Sept 29, Year 2 Purchased a one-year public liability insurance policy for $5,000. The policy becomes effective at 12:01 a.m. October 1. Year 2 Sept 30. Year 2 Received the Sept utility bill that amounted to $775. It is due no later than October 15th. Sept 30. Year 2 For the last two weeks of Sept, they earned $15.000. Of the $15,000 Sept 23, Year 2 Sept 25, Year 2

journalize

Answer 1

Date	Account Titles	Debit	Credit
Year 2		$	$
Sept 1	Cash	125,000
	Common Stock		125,000
Sept 1	Equipment	270,000
	Cash		110,000
	Notes Payable		160,000
Sept 1	Prepaid Rent	12,000
	Cash		12,000
Sept. 4	Office Supplies	1,750
	Accounts Payable		1,750
Sept 5	No journal entry required	0	0
Sept 8	Cash	11,000
	Unearned Revenue		11,000
Sept 12	Salaries Expense	5,250
	Cash		5,250
Sept. 15	Cash	6,000
	Accounts Receivable	4,000
	Service Revenue		10,000
Sept. 17	Repair Supplies	500
	Accounts Payable		500
Sep 23	Cash	4,000
	Accounts Receivable		4,000
Sept 25	No journal entry needed	0	0
Sept 26	Salaries Expense	5,250
	Cash		5,250
Sept 27	Accounts Payable	500
	Cash		500
Sept 28	Dividends	2,500
	Dividends Payable		2,500
Sept 29	No journal entry needed	0	0
Sept 29	Prepaid Insurance	5,000
	Cash		5,000
Sept 30	Utilities Expense	775
	Utilities Payable		775
Sept 30