Question

Dec 1 Eliud deposited $110,000 cash in a bank account in the name of the business, Eliud's Leasing Inc.

Dec 1 Paid 9,000 to Hernandez Realty as three months advance rent on the rental yard and office formerly occupied by Rent-it.

Dec 1 Purchased office supplies on account from Sterling Office co. 1,900. Payment due in 30 days Dec 6 Purchased for 160,000 all equipment formerly owned by Rent-it. Paid 60,000 cash and issued a one year note payable for 10,000, plus interest at the annual rate of 9%.

Dec 8 Received 12, 000 cash from Lewis construction Co. as advance payment on rental equipment.

Dec 12 paid salaries for the first two weeks in December, $5,500

Dec 15 Excluding the Lewis advance, equipment rental fees earned during the first 15 days of December amounted $6,000, of which $4,500 was received in cash.

Dec 17 Purchased on account from Rutland Movers, Inc, $500 in parts needed to repair a rental tractor. Payment is due in 10 days.

Dec 22 Purchased a 12 month public-liability insurance policy for $2,900. 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, and affords no coverage for the injuries sustained by Kevin Davenport on December 20.

Dec 23 Collected $400 of the accounts receivable recorded on December 15

Dec 26 paid biweekly salaries, $5,500.

Dec 27 Paid account payable to Rutland Movers, Inc., $500.

Dec 28 Eliud Torres withdrew $2,500 cash from the business to pay the rent on his personal residence.

Dec 29 Received a bill from Universal Utilities for the months of December, $170. Payment is due in 30 days.

Dec 31 Equipment rental fees earned during second half of December and received in cash amounted to $8,400. Data for Adjusting Entries

A. The advance payment of Hernandez for rent on December 1 covered a period of three months.

B. Interest accrued on the note payable to Rent-it amounted to $750 at December 31.

C. The rental equipment is being depreciated by the straight-line method over a period of 10 years.

D. Office supplies on hand at December 31 are estimated at $900. E During December, the company earned $4,500 of the rental fees paid in advance by Lewis Construction Co. on December 8.

F. As of December, Eliud's Leasing Inc. has earned five days rent on the backhoe rent to Jagne Landscaping on Dec 25.

G. Salaries earned by employees since the last payroll date (December 26) amounted to $2,000 at month-end.

Instructions Journalize the transactions Post to ledger accounts (use running balance form of ledger accounts. Enter number of journal pages and ledger accounts to complete the cross-referencing between the journal and ledger Prepare a 10 column worksheet for the month ended December 31,20__ Journalize adjusting entries and post to ledger accounts Prepare financial statement (Income statement, statement of owners equity and a balance sheet in report form as of December 31) Prepare closing entries and post to ledger accounts Prepare an after closing Trial Balance as of December 31.

Answer 1

23 Credit Debit 110000 Date Account title & explanation 1-Dec Cash Capital (To record amount invested in business) 110000 9000 1-Dec Prepaid Rent Cash (To record rent paid in advance) 9000 1900 1-Dec Office Supplies Accounts Payable (To record office supplies on account) 1900 160000 6-Dec Equipment Cash Notes Payable (To record purchase of notes payable) 60000 100000 39 12000 8-Dec Cash Unearned Rental equipment Fees (To record rent received in advance) 12000 43 5500 46 12-Dec Salaries expense Cash (To record salaries paid) 5500 47

4500 1500 51 15-Dec Cash Accounts Receivable Equipment Rental Fees (To record fees earned) 6000 500 55 17-Dec Tractor (Parts needed to repair) Accounts Payable (To record parts purchased) 500 56 58 2900 22-Dec Prepaid Insurance Cash (To record prepaid insurance) 59 60 61 62 2900 400 63 23-Dec Cash Accounts Receivable (To record cash received) 400 64 65 66 67 5500 26-Dec Salaries expense Cash (To record salaries paid) 5500 68 69 500 27-Dec Accounts Payable Cash (To record payment made ) 500

2500 28-Dec Drawings Cash (To record drawings) 2500 170 29-Dec Utilities expense Utilities Payable (To record bill received) 170 80 8400 31-Dec Cash Equipment Rental Fees (To record fees earned) 8400 84 85 87 3000 Adjusting Entries Rent expense (9000/3) Prepaid Rent (To record rent expired) 3000 88 89 90 750 92 Interest Expense Interest Payable (To record accrued interest expense) 750 93 1,333 1,333 Depreciation Expense - Equipment Accumulated Depreciation - Equipment (To record depreciation expense) (160000/10*1/12)

1,000 100 d 101 102 103 Supplies expense (1900 - 900) Supplies (To record supplies consumed during the month) 1,000 104 e 4500 105 Unearned Rental equipment Fees Equipment Rental Fees (To record rental fees earned) 4500 106 107 108 2,000 109 Accounts receivable (6000/15*5) Equipment Rental Fees (To record fees earned during the year) 2,000 110 111 112 g 113 2,000 Salaries Expense Salaries Payable ((To record accrued salaries & wages) 2,000 114 115