Question

SUSQUEHANNA EQUIPMENT RENTALS Balance Sheet December 31, Year 1 Assets Cash Accounts receivable Prepaid rent Unexpired insurance Office supplies Rental equipment Total assets Liabilities & Stockholders' equity Liabilities: Accounts payable Salaries payable Unearned rental fees Dividends payable Income taxes payable Interest payable Total liabilities Stockholders' equity: Capital stock Retained earnings Total stockholders equity Total liabilities and stockholders' equit

Answer 1

Susquehanna Equipment Rentals Journal Enteries Particulars 1.12.Year 1 Cash a/c Debit in $Credit in $ Date 240000 Dr. To Common Stock 240000 (Common Stock issued for cash) 1.12.Year 1 Rental Equipment a/c 211200 Dr. To Cash 131000 To Note Payable 80200 (Equipment purchased) 1.12.Year 1 Prepaid Rent a/c 11700 Dr. To Cash 11700 (3 months rent paid in advance) 4.12.Year 1 Office Supplies a/c To Accounts Payable 1700 Dr. 1700 (Supplies on account) 8.12.Year 1 Cash a/c 8800 Dr. To Unearned Rental Fees 8800 (Rent revenue received in advance) 12.12.Year 1 Salaries expense a/c Dr. 4700 To Cash 4700 |(Salary Paid) 15.12.Year 1 Accounts Receivable a/c Dr. Cash a/c 6200 Dr. 12600 To Rental fees earned 18800 |(Rental fees earned) 17.12.Year 1 Maintenance expense a/c Dr. 700 To Cash 700 |(Repair expense paid) 23.12.Year 1 Cash a/c 3000 Dr. To Accounts Receivable 3000 (Cash collected from debtors) 26.12.Year 1 No Entry

Particulars 26.12.Year 1 Salaries expense a/c Debit in $ Credit in $ Date Dr. 4700 To Cash 4700 |(Salary Paid) 27.12.Year 1 Accounts Payable a/c Dr 700 To Cash 700 (Creditors paid) 28.12.Year 1 Dividends a/c Dr. 2400 To Dividends Payable (Dividend declared) 2400 29.12.Year 1 Prepaid Insurance a/c Dr. 9120 To Cash 9120 (Annual insurance paid) 31.12.Year 1Utilities expense a/c Dr. 670 To Accounts Payable 670 |(Utility Expense accrued) 31.12.Year 1 Accounts Receivable a/c Dr. Cash a/c 3700 16400 Dr. To Rental fees earned 20100 |(Rental fees earned)

Adjusting Enteries Particulars 31.12.Year 1 Rent expense a/c Debit in $ Credit in $ Date 3900 Dr. 3900 To Prepaid Rent (Rent Expensed) 31.12.Year 1 Interest expense a/c Dr. 401 To Interest Payable |80200 x 6% x 1/ 12 |(Interest accrued) 401 31.12.Year 1 Depreciation a/c Dr. 2200 To Accumulated Depreciation -Equip (211200)/ (8x12) (To record depreciation) 2200 31.12.Year 1 Office supplies expense a/c Dr. To Office Supplies (Supplies Expensed) 1700 610 1090 1090 31.12.Year 1 Unearned Rental fees a/c 4100 Dr. To Rental fees earned 4100 |(Rental fees earned) 31.12.Year 1 Accounts Receivable a/c Dr. 2040 To Rental fees earned 2040 (Rental fees earned) 340 x 6 2040 31.12.Year 1 Salaries expense a/c Dr. 1200 To Salaries Payable (Salary Expense accrued) 1200 31.12.Year 1 Income tax expense a/c 10192 Dr. 10192 To Income tax payable (Income tax expense accrued) Closing Enteries Particulars Debit in $ Credit in $ Date 31.12.Year 1 Income Summary a/c Dr. 29753 To Maintenance expense 700 To Salaries expense 1200 To Salaries expense 9400 670 To Utilities expense To Rent expense 3900 To Interest expense 401 To Depreciation To Office supplies expense 2200 1090 To Income tax expense 10192 (Expense accounts closed) 31.12.Year 1 Rental fees earned a/c Dr. 45040 To Income Summary (Revenue accounts closed) 45040 31.12.Year 1 Income Summary a/c Dr. 15287 To Retained Earnings 15287 (Profits transferred) 31.12.Year 1 Retained Earnings a/c Dr. 2400 To Dividends 2400 (Dividends transferred)

Trial Balance For the period ending 31.12.Year 1 Adjustments Unadjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Adjusted Balance sheet Income Statement Particulars Cash 118180 118180 118180 Accounts Receivable 6900 2040 8940 8940 7800 7800 Prepaid Rent 11700 3900 Prepaid Insurance Office Supplies 9120 9120 9120 610 1700 1090 610 Rental Equipment Accumulated Depreciation-Equip 211200 211200 211200 2200 2200 2200 ccounts Payable 1670 161 Salaries Payable 1200 1200 1200 Unearned Rental Fees 8800 4100 4700 4700 Dividends Payable 2400 2400 2400 Income tax payable 10192 10191.6 10192 Interest Payable 401 401 401 Note Payable 80200 80200 80200 Common Stock 240000 240000 240000 Retained Earnings 12887 Dividends 2400 2400 Rental fees earned 38900 6140 45040 45040 Maintenance expense 700 700 700 Salaries expense 1200 1200 1200 Salaries expense 9400 9400 9400 Utilities expense 670 670 670 Rent expense 3900 3900 3900 Interest expense 401 401 401 Depreciation Office supplies expense 2200 2200 2200 1090 1090 1090 Income tax expense 10192 10192 10192 Totals 45040 371970 371970 25123 25123 388003 388003 29753 355850 355850 15287 0

Statement of Income For the period ending 31.12.Year 1 Rental fees earned 45040 Less: Maintenance expense 700 Salaries expense 1200 Salaries expense 9400 Utilities expense 670 Rent expense 3900 Interest expense 401 Depreciation 2200 Office supplies expense 1090 19 25479 Less:Tax at 40% 10192 15287 Statement of Retained Earnings For the period ending 31.12.Year 1 1.1.Year 1 0 Add:Net Income 15287 15287 Less:Dividends -2400 12887

Balance sheet As at 31.12.Year 1 Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Assets Current Liabilities Current Assets Accounts Payable Cash 118180 1670 Accounts Receivable 8940 Salaries Payable 1200 Unearned Rental Fees Prepaid Rent 7800 4700 Prepaid Insurance Office Supplies Dividends Payable 9120 2400 144650 Income tax payable 610 10191.6 Interest Payable 401 20563 Non Current Assets Rental Equipment Liabilties 211200 Non Accumulated Deprecia 209000 Note Payable -2200 80200 Shareholders Equity Common Stock 240000 Retained Earnings 12887 252887 Total Assets 353650 Total Liabilities & Shareholders eq. 353650