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Complete this question by entering your answers in the tabs below. Journalize the December transactions. Do not record adjusting entries at this point. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field).

Journal entry worksheet: Record the issuance of cash, purchase of equipment, rent payment, supplies purchase, received advance payment, salaries paid, rental fees earned, purchase of parts, collection of receivables, rental of equipment, payroll, account payable payments, dividend declaration, lawsuit entry, liability insurance, utilities, and second-half rental fees. Enter debits before credits. Use the provided accounts.

Paper For Above instruction

The formation of Susquehanna Equipment Rentals by John and Patty Driver on December 1 marked an important milestone for the company, following its acquisition of assets from Rent-It, an equipment rental business facing closure. This initial step involved multiple transactions that laid the groundwork for subsequent financial activities. Proper journalization of these transactions provides a clear financial picture and ensures accuracy for future statements.

On December 1, the company issued 20,000 shares of capital stock for $240,000, reflecting a significant infusion of capital. This entry affects the Cash and Capital Stock accounts. Concurrently, the purchase of all equipment from Rent-It for $288,000 added new assets, financed partly through cash ($168,000) and a note payable ($120,000). Recording this transaction involves debiting the Equipment account and crediting Cash and Notes Payable accordingly.

The subsequent transaction on December 1 involved paying $14,400 for three months' rent in advance. This payment increases Prepaid Rent and decreases Cash. On December 4, office supplies purchased on account from Modern Office Co. for $1,200 are recorded as an asset, reflecting future utility. The received advance on equipment rental from McNamer Construction on December 8 amounts to $9,600, classified as Unearned Rental Fees, emphasizing the company's liability until earned. Salaries paid on December 12, totaling $6,240, reduce Cash and are recorded under Salaries Expense.

By December 15, rental fees earned over the first half of December amount to $21,600, with $14,400 received in cash. This revenue recognition increases Rental Fees Earned and cash or accounts receivable. On December 17, parts purchased on account for $720 are recorded as an expense—Repair Parts—highlighting operational costs. Collection of part of the accounts receivable on December 23 signifies cash inflow and must be recorded accordingly.

The rental of a backhoe to Mission Landscaping on December 26 at $300 daily involves rental income recognition based on usage. The payment for backhoe rental is deferred until return. Salaries paid again on December 26 indicate a payroll expense, reducing cash. Payment to Earth Movers, Inc., for parts purchased earlier decreases Accounts Payable, aligning liabilities and cash outflows.

Dividends declared on December 28, at $0.12 per share, are recorded as Dividends Payable until paid in January, reflecting shareholder distributions. The lawsuit filed on December 29 introduces potential liabilities, but no journal entry is required at this stage—only disclosures are necessary. The purchase of a 12-month liability insurance policy on December 29, effective January 1, 2022, is registered as Prepaid Insurance.

Utilities expense incurred in December, billed at $840, increases Utilities Expense and Accounts Payable. Finally, rental income earned during the second half of December, totaling $24,000 (with part received and part accrued), is recorded as Rental Fees Earned and either cash or accounts receivable.

These transactions collectively form the foundational entries for December’s financial statements. Proper journalization ensures accurate reflection of assets, liabilities, income, and expenses, which is critical for effective financial management and reporting.

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