![]() Prepare the necessary adjusting entries for December. Prepare the unadjusted trial balance for the year ended December 31. Post the December transactions to the appropriate ledger accounts (T-Accounts). (Do not record adjusting entries at this point.) 2. Perform the following steps of the accounting cycle for the month of December using the Excel file "5203 Assignment 2 Working File". Salaries earned by employees since the last payroll date (December 26) amounted to $1,680 at month-end. It is estimated that the company is subject to a combined federal and provincial income tax rate of 40 percent of income before income taxes. As of December 31, six days' rent on the backhoe rented to Sydney Landscaping on December 26 has been earned. During December, the company earned $4,440 of the rental fees paid in advance by RD Construction Company on December 8. The advance payment of rent on December 1 covered a period of three months. The rental equipment is being depreciated by the straight-line method over a period of eight years. The annual interest rate on the note payable to Cabot Trail Rentals is 6 percent. Office supplies on hand at December 31 are estimated at $720. Equipment rental fees earned during the second half of December amounted to $24,000, of which $18,720 was received in cash. ![]() Received a bill from Nova Scotia Power for the month of December, $840. The policy goes into effect on January 1, Year 2. This policy protects the company against liability for injuries and property damage caused by its equipment. 31 Purchased a 12-month public liability insurance policy for $11,520. Purchased on account from Earth Movers, Inc., $720 in parts needed to repair a rental tractor. Collected $2,400 of the accounts receivable recorded on December 15. Sydney Landscaping expects to keep the backhoe for about two or three weeks. Rented a backhoe to Sydney Landscaping at a price of $300 per day, to be paid when the backhoe is returned. 26 Excluding the RD Construction Company advance, equipment rental fees earned during the first 15 days of December amounted to $21,600, of which $14,400 was received in cash. Paid salaries for the first two weeks in December, $6,240. Received $9,600 cash as advance payment on equipment rental from RD Construction Company. (Upon pick up Diane exclaimed, "I don't know why Jack ordered so many supplies - these will last us several months!") Paid $14,400 to Cape Breton Realty as three months' advance rent on the rental yard and office formerly occupied by Cabot Trail Rentals. Purchased office supplies on account from Connors Basics, $1,200. The note, plus all 12 months of accrued interest, are due November 30, Year 2. Paid $168,000 cash and issued a 1-year note payable for $120,000. Purchased for $288,000 all of the equipment formerly owned by Cabot Trail Rentals. ![]() 12 Rental Fees Earned (Revenue) Office Supplies Expense Salaries Expense Maintenance Expense Utilities Expense Rent Expense Depreciation Expense Interest Expense Income Taxes Expense Issued to Jack and Diane Jones 20,000 shares of capital stock in exchange for a total of $210,000 cash. 8 Contributed Capital Retained Earnings Dividends Dec. During December, the corporation entered into the following transactions. Closing entries are performed annually on December 31. 1 The corporation performs adjusting entries monthly. Cash Accounts Receivable Prepaid Rent Prepaid Insurance Office Supplies Rental Equipment Accumulated Depreciation: Rental Equipment Notes Payable Accounts Payable Interest Payable Salaries Payable Dividends Payable Unearned Rental Fees (Liability) Income Taxes Payable Dec. The newly formed company uses the following accounts. The new corporation was able to begin operations immediately by purchasing the assets and taking over the location of Cabot Trail Rentals, an equipment rental company that was going out of business. On December 1, Year 1, Jack and Diane Jones formed a corporation Rent-Me Incorporated.
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