5 to 6 hours
Strong
COMPREHENSIVE PROBLEM 1
Susquehanna Equipment Rentals
A mini-practice set illustrating the complete accounting cycle for a service-type
business. Includes computation of income taxes expense (as a percentage of
income before taxes) and an evaluation of solvency. Can be done as a group
assignment.
SUSQUEHANNA EQUIPMENT RENTALS
5 to 6 hours, Strong
Dec 1 Cash 200
,
000
,
1 12
,
000
Cash 12
,
000
,
,
,
,
,
,
,
COMPREHENSIVE PROBLEM 1
SUSQUEHANNA EQUIPMENT RENTALS
a.
2015
General Journal
December Daily Transactions
Purchased e
q
ui
p
ment from Rent-it. Note
p
a
y
able
Pre
p
aid Rent
Realt
y
.
is due in one
y
ear.
Paid three months’ rent in advance to Sha
p
iro
Copyright © 2015 by McGraw-Hill Education All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
,
Dec 26 5
,
200
Cash 5
,
200
27 600
Cash 600
,
,
,
,
December Daily Transactions
Accounts Pa
y
able
Paid account
p
a
y
able to Earth Movers
,
Inc.
COMPREHENSIVE PROBLEM 1
SUSQUEHANNA EQUIPMENT RENTALS
Salaries Ex
p
ense
(
cont
i
nue
d)
a.
2015
Paid biweekl
y
p
a
y
roll.
General Journal
,
Dec 31 4
,
000
Pre
p
aid Rent 4
,
000
31 500
Interest Pa
y
able 500
,
,
y
,
,
,
,
Rent Ex
p
ense
To reco
g
nize rent ex
p
ense for December.
Interest on note
p
a
y
able to Rent-It
(
$100
,
000 x 6%
x 1/12
)
.
Interest Ex
p
ense
COMPREHENSIVE PROBLEM 1
SUSQUEHANNA EQUIPMENT RENTALS
(Adjusting Entries)
General Journal
(
cont
i
nue
d)
a.
2015
,
a.
D
e
bit
C
re
dit
B
a
l
ance
Dec 1 200
,
000 200
,
000
1 140
,
000 60
,
000
1 12
,
000 48
,
000
8 8
,
000 56
,
000
,
,
,
,
,
,
,
,
,
,
,
D
bit
C
dit
B
l
,
,
D
bit
C
dit
B
l
D
bit
C
dit
B
l
D
bit
C
dit
B
l
A
,
,
,
,
,
,
,
,
,
,
,
,
,
,
COMPREHENSIVE PROBLEM 1
SUSQUEHANNA EQUIPMENT RENTALS
Cash
(
cont
i
nue
d)
Date
Explanation
,
,
a.
D
e
bit
C
re
dit
B
a
l
ance
D
e
bit
C
re
dit
B
a
l
ance
D
e
bit
C
re
dit
B
a
l
ance
D
e
bit
C
re
dit
B
a
l
ance
Dec 4 1
,
000 1
,
000
,
,
,
D
bit
C
dit
B
l
Accumulated Depreciation: Rental Equipment
Explanation
COMPREHENSIVE PROBLEM 1
SUSQUEHANNA EQUIPMENT RENTALS
Rental Equipment
Date
(
cont
i
nue
d)
Explanation
Explanation
Date Explanation
Notes Payable
Date
A
ccounts Payable
Date
a.
D
e
bit
C
re
dit
B
a
l
ance
Dec 31 1
,
400 1
,
400
D
e
bit
C
re
dit
B
a
l
ance
D
e
bit
C
re
dit
B
a
l
ance
,
,
,
D
e
bit
C
re
dit
B
a
l
ance
,
,
D
e
bit
C
re
dit
B
a
l
ance
,
,
Explanation
Capital Stock
Date
Date
Income Taxes Payable
Explanation
Explanation
Date
Date Explanation
Unearned Rental Fees
Date
Explanation
COMPREHENSIVE PROBLEM 1
SUSQUEHANNA EQUIPMENT RENTALS
Salaries Payable
(
cont
i
nue
d)
Dividends Payable
,
,
a. & d.
D
e
bit
C
re
dit
B
a
l
ance
,
,
D
e
bit
C
re
dit
B
a
l
ance
,
,
,
D
e
bit
C
re
dit
B
a
l
ance
,
,
,
,
,
D
e
bit
C
re
dit
B
a
l
ance
Dec 15 18
,
000 18
,
000
,
,
,
,
,
,
,
D
e
bit
C
re
dit
B
a
l
ance
Dec 12 5
,
200 5
,
200
,
,
,
,
,
Dividends
Explanation
COMPREHENSIVE PROBLEM 1
SUSQUEHANNA EQUIPMENT RENTALS
Retained Earnings
Date
(
cont
i
nue
d)
Explanation
Explanation
Date Explanation
Income Summar
y
Date
Rental Fees Earned
Date
Salaries Expense
Explanation
Date
,
,