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COMPREHENSIVE ACCOUNTING CYCLE PROBLEM 1, Year 1. John and Patty Driver formed a corporation called Susquehanna Rentals. The new corporation was able to begin operations immediately by pur ing the assets and taking over the location of Rent-It, an equipment rental company that chasins og out of business. The newly formed company uses the following accounts. was going Cash Accounts Receivable Prepaid Rent Unexpired Insurance Office Supplies Rental Equipment Accumulated Depreciation: Rental Equipment Notes Payable Accounts Payable Income Taxes Payable Capital Stock Retained Earnings Dividends Income Summary Rental Fees Earned Salaries Expense Maintenance Expense Utilities Expense Rent Expense Office Supplies Expense Depreciation Expense Interest Expense Income Taxes Expense Interest Payable Salaries Payable Dividends Payable Unearned Rental Fees The corporation performs adjusting entries monthly. Closing entries are performed annually on December 31. During December, the corporation entered into the following transactions. Dec. 1 Issued to John and Patty Driver 20,000 shares of capital stock in exchange for a Dec. 1 Purchased for $288,000 all of the equipment formerly owned by Rent-It. Paid total of $240,000 cash. $168,000 cash and issued a 1-year note payable for $120,000. The note, plus all 12 months of accrued interest, are due November 30, Year 2. Dec. 1 Paid $14,400 to Shapiro Realty as three months' advance rent on the rental yard and office formerly occupied by Rent-It. Dec. 4 Purchased office supplies on account from Modern Office Co., $1.200. Payment Dec. 8 Dec. 12 Dec. 15 due in 30 days. (These supplies are expected to last for several months; debit the Office Supplies asset account.) Received $9,600 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned Rental Fees.) Paid salaries for the first two weeks in December, $6.240. Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to $21,600, of which $14,400 was received in cash. Dec. 17 Purchased on account from Earth Movers, Inc. $720 in parts needed to repair a Dec. 23 Collected $2,400 of the accounts receivable recorded on December 15 rental tractor. (Debit an expense account.) Payment is due in 10 days

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