On September 1, 2022, Robert (Bob) Faria organized a business called Bob's Equipment Rental Inc. (BERI) for
Question:
BERI uses the following chart of accounts:
Assets: Cash, Accounts Receivable, Prepaid Rent, Office Supplies, Rental Equipment,
Accumulated depreciation: Rental Equipment
Liabilities: Notes Payable, Accounts Payable, Interest Payable, Salaries Payable, Unearned Rental Fees
Shareholder's Equity: Common Shares, Retained Earnings, Dividends
Revenues: Rental Fees Earned
Expenses: Salaries Expense, Maintenance Expense, Utilities Expense, Rent Expense, Office Supplies Expense, Depreciation Expense, Interest Expense
In September, the company entered the following transactions:
Sept. 1 Issued common shares to Robert Faria and other investors in exchange for $200,000 cash.
Sept 1 Paid $9,000 to Wellington Realty as three months' advance rent on the rental yard and office formerly occupied by Rent-It
Sept 1 Purchased for $180,000 all the equipment formerly owned by Rent-It. Paid $70,000
cash and issued a one-year note payable for $110,000, plus interest at the
annual rate of 9%. This rental equipment is estimated to have a 10-year useful life and zero residual value. It is depreciated using the straight-line method.
Sept 4 Purchased office supplies on account from Modern Office Co., $1,630. Payment due in 30 days. (These supplies are expected to last for several months.)
Sept 8 Received $10,000 cash from McFadden Construction Co. as advance payment for equipment rental.
Sept 12 Paid salaries for the first two weeks in September, $3,600.
Sept 15 Excluding the McFadden advance, equipment rental fees earned during the first 15
days of September amounted to $6,100, of which $5,300 was received in cash and $800 was an account receivable.
Sept 17 Purchased on account from Earth Movers, Inc., $340 in parts needed to repair a rental tractor. Payment is due in 10 days.
Sept 23 Collected $210 of the accounts receivable recorded on September 15.
Sept 26 Rented a backhoe to Mission Landscaping at a price of $100 per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two or three weeks.
Sept 26 Paid biweekly salaries, $3,600.
Sept 27 Paid the account payable to Earth Movers, Inc., $340.
Sept 28 Paid dividends of $2,000 cash.
Sept 30 Received a bill for utilities expense for the month of September, $270. Payment is due in 30 days.
Sept 30 Cash received from equipment rental during the second half of September, $6,450.
The information available on September 30 is as follows: the office supplies on hand are estimated at $1,100; $4,840 of the advance payment from McFadden Construction Co. has been earned; salaries earned by employees since the last payroll are $900.
Instructions:
Create journal entries for the above transactions in September and post the transactions to the ledger, using T-accounts and adding any new accounts which you need. You may omit narratives to the journal entries.
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello