Tony’s Rentals:

On September 1, 20__, Anthony Ferrara organized a business called Tony’s Rentals for the
purpose of operating an equipment rental yard. The new business was able to begin operations
immediately by purchasing the assets and taking over the location of Rent-It, an equipment rental
company that was going out of business.

Tony’s Rental uses the following chart of accounts:

Cash 1 Anthony Ferrara, Capital 30

Account Receivable 4 Anthony Ferrara, Drawing 35
Prepaid Rent 6 Income Summary 40
Unexpired Insurance 7 Rental Fees Earned 50
Office Supplies 8 Salaries Expense 60
Rental Equipment 10 Maintenance Expense 61
Accumulated Dep. – R. Equip. 12 Utilities Expense 62
Notes Payable 20 Rent Expense 63
Account Payable 22 Office Supplies Expense 64
Interest Payable 25 Depreciation Expense – R. Equip. 65
Salaries Payable 26 Interest Expense 66
Unearned Rental Fee 29

Answer:

Tony’s Rental
General Journal
For the month of September 20__

DEBIT CREDIT
DATE PARTICULARS P/R
$ $

Sept. 1 Cash 1 100,000

Anthony Ferrara, Capital 30 100,000
Received cash in business Tony’s Ren

Sept. 1 Prepaid Rent 6 9,000

Cash 1 9,000
Paid 3 months advance rent

Sept. 1 Rental Equipment 10 180,000

Cash 1 70,000
Notes Payable 20 110,000
Paid for Equipment in Cash & Notes
Payable @ 9% per annum

Sept. 4 Office Supplies 8 1,630

 Accounts Payable 22 1,630
Purchase office supplies on account
 DEBIT CREDIT
DATE PARTICULARS P/R
$ $

Sept. 8 Cash 1 10,000

Unearned Rental Fee 29 10,000
Received advance rent on rental yard

Sept. 12 Salaries Expense 60 3,600

Cash 1 3,600
Paid salaries for first two week

Sept. 15 Cash 1 5,300

Account Receivable 4 800
Rental Fee Earned 50 6,100
Rental fee earned in cash & on accou

Sept. 17 Maintenance Expense 61 340

Accounts Payable 22 340
Purchase part for repairing on accoun

Sept. 23 Cash 1 210

Account Receivable 4 210
Received cash on account of rental f

Sept. 25 No Entry
Rented a backhoe @ $100 per day, b
when he return after two or three w

Sept. 26 Salaries Expense 60 3,600

Cash 1 3,600
Paid biweekly salaries

Sept. 27 Account Payable 22 340

Cash 1 340
Paid to Earth Movers Inc.

Sept. 28 Anthony Ferrara, Drawing 35 2,000

Cash 1 2,000
Anthony withdrawal for personal use

Sept. 29 No Entry
Co-defendant $25,000 lawsuit filed o
behalf of Kevin Davenport

Sept. 29 Unexpired Insurance 7 2,700

Cash 1 2,700
Purchase 12 months insurance policy
 DEBIT CREDIT
DATE PARTICULARS P/R
$ $

Sept. 30 Utilities Expense 62 270

Account Payable 22 270
Received utility bill m/o September

Sept. 30 Cash 1 8,450

Rental Fee Earned 50 8,450
Received cash of rental fee second ha

Tony’s Rental
General Ledger
For the month of September 20__

Cash 1
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $
Anthony Ferrara,
Sept. 1 Capital 30 100,000 Sept. 1 Prepaid Rent 6 9,000
Unearned Rental
Sept. 8 Fee 29 10,000 Sept. 1 Rental Equipment 10 70,000
Rental Fee
Sept. 15 Earned 50 5,300 Sept. 12 Salaries Expense 60 3,600
Account
Sept. 23 Receivable 4 210 Sept. 26 Salaries Expense 60 3,600
Rental Fee
Sept. 30 Earned 50 8,450 Sept. 27 Account Payable 22 340
Anthony Ferrara,
Sept. 28 Drawing 35 2,000
Unexpired
Sept. 29 Insurance 7 2,700

Sept. 30 Balance c/f 32,720

123,960 123,960
Oct. 1 Balance b/f 32,720

Account Receivable 4
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $
Rental Fee
Sept. 15 Earned 50 800 Sept. 23 Cash 1 210

Sept. 30 Balance c/f 590

800 800
Oct. 1 Balance b/f 590
 Prepaid Rent 6
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 1 Cash 1 9,000

Sept. 30 Balance c/f 9,000

9,000 9,000
Oct. 1 Balance b/f 9,000

Unexpired Insurance 7
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 29 Cash 1 2,700

Sept. 30 Balance c/f 2,700

2,700 2,700
Oct. 1 Balance b/f 2,700

Office Supplies 8
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 4 Accounts Payable 22 1,630

Sept. 30 Balance c/f 1,630

1,630 1,630
Oct. 1 Balance b/f 1,630

Rental Equipment 10
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $
Cash & Notes 1&
Sept. 1 Payable 20 180,000

Sept. 30 Balance c/f 180,000

180,000 180,000
Oct. 1 Balance b/f 180,000

Notes Payable 20
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 1 Rental Equipment 10 110,000

Sept. 30 Balance c/f 110,000

110,000 110,000
Oct. 1 Balance b/f 110,000
 Account Payable 22
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 27 Cash 1 340 Sept. 4 Office Supplies 8 1,630

Maintenance
Sept. 17 Expense 61 340

Sept. 30 Utilities Expense 62 270

Sept. 30 Balance c/f 1,900

2,240 2,240
Oct. 1 Balance b/f 1,900

Unearned Rental Fee 29

DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 8 Cash 1 10,000

Sept. 30 Balance c/f 10,000

10,000 10,000
Oct. 1 Balance b/f 10,000

Anthony Ferrara, Capital 30

DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 1 Cash 1 100,000

Sept. 30 Balance c/f 100,000

100,000 100,000
Oct. 1 Balance b/f 100,000

Anthony Ferrara, Drawing 35

DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 28 Cash 1 2,000

Sept. 30 Balance c/f 2,000

2,000 2,000
Oct. 1 Balance b/f 2,000
 Rental Fees Earned 50
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $
Cash & Account
Sept. 15 Receivable 1&4 6,100

Sept. 30 Cash 1 8,450

Sept. 30 Balance c/f 14,550

14,550 14,550
Oct. 1 Balance b/f 14,550

Salaries Expense 60
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 12 Cash 1 3,600

Sept. 26 Cash 1 3,600

Sept. 30 Balance c/f 7,200

7,200 7,200
Oct. 1 Balance b/f 7,200

Maintenance Expense 61
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 17 Accounts Payable 22 340

Sept. 30 Balance c/f 340

340 340
Oct. 1 Balance b/f 340

Utilities Expense 62
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Account Payable 22 270

Sept. 30 Balance c/f 270

270 270
Oct. 1 Balance b/f 270
Tony’s Rental
Trail Balance
For the month of September 20__

S.NO. COA ACCOUNT NAME DEBIT $ CREDIT $

1 1 Cash 32,720
2 4 Account Receivable 590
3 6 Prepaid Rent 9,000
4 7 Unexpired Insurance 2,700
5 8 Office Supplies 1,630
6 10 Rental Equipment 180,000
7 20 Notes Payable 110,000
8 22 Account Payable 1,900
9 29 Unearned Rental Fee 10,000
10 30 Anthony Ferrara, Capital 100,000
11 35 Anthony Ferrara, Drawing 2,000
12 50 Rental Fees Earned 14,550
13 60 Salaries Expense 7,200
14 61 Maintenance Expense 340
15 62 Utilities Expense 270

TOTAL 236,450 236,450

Tony’s Rental
Adjusted General Journal
For the month of September 20__

DEBIT CREDIT
DATE PARTICULARS P/R
$ $

Sept. 30 Rent Expense 63 3,000

Prepaid Rent 6 3,000
To record rent expense m/o Sept.

Sept. 30 Interest Expense 66 825

Interest Payable 25 825
To record Interest @ 9% per annum

Sept. 30 Depreciation Expense – R. Equip. 65 1,500

Accumulated Dep. – R. Equip. 12 1,500
To record depreciation m/o Sept.

Sept. 30 Office Supplies Expense 64 530

Office Supplies 8 530
To record depreciation m/o Sept.
 DEBIT CREDIT
DATE PARTICULARS P/R
$ $

Sept. 30 Unearned Rental Fee 29 4,840

Rental Fees Earned 50 4,840
To record rental fee in advance

Sept. 30 Account Receivable 4 500

Rental Fees Earned 50 500
To record 5 days rent earned Mission

Sept. 30 Salaries Expense 60 900

Salaries Payable 26 900
To record salaries expense last payrol

Tony’s Rental
Adjusted General Ledger
For the month of September 20__

Account Receivable 4
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Balance c/f 590

Rental Fees
Sept. 30 Earned 50 500

Sept. 30 Balance c/f 1,090

1,090 1,090
Oct. 1 Balance b/f 1,090

Prepaid Rent 6
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Balance c/f 9,000 Sept. 30 Rent Expense 63 3,000

Sept. 30 Balance c/f 6,000

9,000 9,000
Oct. 1 Balance b/f 6,000
 Office Supplies 8
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $
Office Supplies
Sept. 30 Balance c/f 1,630 Sept. 30 Expense 64 530

Sept. 30 Balance c/f 1,100

1,630 1,630
Oct. 1 Balance b/f 1,100

Accumulated Dep. – R. Equip. 12

DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Depreciation
Expense – R.
Sept. 30 Equip. 65 1,500

Sept. 30 Balance c/f 1,500

1,500 1,500
Oct. 1 Balance b/f 1,500

Interest Payable 25
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Interest Expense 66 825

Sept. 30 Balance c/f 825

825 825
Oct. 1 Balance b/f 825

Salaries Payable 26
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Salaries Expense 60 900

Sept. 30 Balance c/f 900

900 900
Oct. 1 Balance b/f 900
 Unearned Rental Fee 29
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $
Rental Fees
Sept. 30 Earned 50 4,840 Sept. 30 Balance b/f 10,000

Sept. 30 Balance c/f 5,160

10,000 10,000
Oct. 1 Balance b/f 5,160

Rental Fees Earned 50

DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Balance b/f 14,550

Unearned Rental
Sept. 30 Fee 29 4,840
Account
Sept. 30 Receivable 4 500

Sept. 30 Balance c/f 19,890

19,890 19,890
Oct. 1 Balance b/f 19,890

Salaries Expense 60
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Balance c/f 7,200

Sept. 30 Salaries Payable 26 900

Sept. 30 Balance c/f 8,100

8,100 8,100
Oct. 1 Balance b/f 8,100

Rent Expense 63
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Prepaid Rent 6 3,000

Sept. 30 Balance c/f 3,000

3,000 3,000
Oct. 1 Balance b/f 3,000
 Office Supplies Expense 64
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Office Supplies 8 530

Sept. 30 Balance c/f 530

530 530
Oct. 1 Balance b/f 530

Depreciation Expense – R. Equip. 65

DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $
Accumulated
Sept. 30 Dep. – R. Equip. 12 1,500

Sept. 30 Balance c/f 1,500

1,500 1,500
Oct. 1 Balance b/f 1,500

Interest Expense 66
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Interest Payable 25 825

Sept. 30 Balance c/f 825

825 825
Oct. 1 Balance b/f 825
Tony’s Rental
Adjusted Trail Balance
For the month of September 20__

S.NO. COA ACCOUNT NAME DEBIT $ CREDIT $

1 1 Cash 32,720
2 4 Account Receivable 1,090
3 6 Prepaid Rent 6,000
4 7 Unexpired Insurance 2,700
5 8 Office Supplies 1,100
6 10 Rental Equipment 180,000
7 12 Accumulated Dep. – R. Equip. 1,500
8 20 Notes Payable 110,000
9 22 Account Payable 1,900
10 25 Interest Payable 825
11 26 Salaries Payable 900
12 29 Unearned Rental Fee 5,160
13 30 Anthony Ferrara, Capital 100,000
14 35 Anthony Ferrara, Drawing 2,000
15 40 Income Summary
16 50 Rental Fees Earned 19,890
17 60 Salaries Expense 8,100
18 61 Maintenance Expense 340
19 62 Utilities Expense 270
20 63 Rent Expense 3,000
21 64 Office Supplies Expense 530
22 65 Depreciation Expense – R. Equip. 1,500
23 66 Interest Expense 825

TOTAL 240,175 240,175

Tony’s Rental
Income Statement
For the month of September 20__

Revenue:
Rental Fees Earned $ 19,890

Expenses:
Salaries Expense $ 8,100
Maintenance Expense $ 340
Utilities Expense $ 270
Rent Expense $ 3,000
Office Supplies Expense $ 530
Depreciation Expense – R. Equip. $ 1,500
Interest Expense $ 825 $ (14,565)
Net Income $ 5,325
Tony’s Rental
Closing General Journal
For the month of September 20__

DEBIT CREDIT
DATE PARTICULARS P/R
$ $

Sept. 30 Rental Fees Earned 50 19,890

Income Summary 40 19,890
To closed revenue account m/o Sept.

Sept. 30 Income Summary 40 14,565

Salaries Expense 60 8,100
Maintenance Expense 61 340
Utilities Expense 62 270
Rent Expense 63 3,000
Office Supplies Expense 64 530
Depreciation Expense – R. Equip. 65 1,500
Interest Expense 66 825
To closed expense account m/o Sept.

Sept. 30 Income Summary 40 5,325

Anthony Ferrara, Capital 30 5,325
To closed income summary account

Sept. 30 Anthony Ferrara, Capital 30 2,000

Anthony Ferrara, Drawing 35 2,000
To closed Anthony's, Drawing accoun

Tony’s Rental
Closing General Ledger
For the month of September 20__

Rental Fees Earned 50

DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Income Summary 40 19,890 Sept. 30 Balance b/f 19,890

19,890 19,890
Oct. 1 Balance b/f -
 Salaries Expense 60
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Balance b/f 8,100 Sept. 30 Income Summary 40 8,100

8,100 8,100
Oct. 1 Balance b/f -

Maintenance Expense 61
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Balance b/f 340 Sept. 30 Income Summary 40 340

340 340
Oct. 1 Balance b/f -

Utilities Expense 62
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Balance b/f 270 Sept. 30 Income Summary 40 270

270 270
Oct. 1 Balance b/f -

Rent Expense 63
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Balance b/f 3,000 Sept. 30 Income Summary 40 3,000

3,000 3,000
Oct. 1 Balance b/f -

Office Supplies Expense 64

DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Balance b/f 530 Sept. 30 Income Summary 40 530

530 530
Oct. 1 Balance b/f -
 Depreciation Expense – R. Equip. 65
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Balance b/f 1,500 Sept. 30 Income Summary 40 1,500

1,500 1,500
Oct. 1 Balance b/f -

Interest Expense 66
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $

Sept. 30 Balance b/f 825 Sept. 30 Income Summary 40 825

825 825
Oct. 1 Balance b/f -

Income Summary 40
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $
Rental Fees
Sept. 30 Salaries Expense 60 8,100 Sept. 30 Earned 50 19,890
Maintenance
Sept. 30 Expense 61 340

Sept. 30 Utilities Expense 62 270

Sept. 30 Rent Expense 63 3,000

Office Supplies
Sept. 30 Expense 64 530
Depreciation
Expense – R.
Sept. 30 Equip. 65 1,500

Sept. 30 Interest Expense 66 825

Anthony Ferrara,
Sept. 30 Capital 30 5,325

19,890 19,890
Oct. 1 Balance b/f -

Anthony Ferrara, Drawing 35

DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR
Anthony Ferrara, P/R CREDIT $
Sept. 30 Balance b/f 2,000 Sept. 30 Capital 30 2,000

2,000 2,000
Oct. 1 Balance b/f -
 Anthony Ferrara, Capital 30
DATE PARTICULAR P/R DEBIT $ DATE PARTICULAR P/R CREDIT $
Anthony Ferrara,
Sept. 30 Drawing 35 2,000 Sept. 30 Balance b/f 100,000

Sept. 30 Income Summary 40 5,325

Sept. 30 Balance c/f 103,325

105,325 105,325
Oct. 1 Balance b/f 103,325

Tony’s Rental
Closing Trail Balance
For the month of September 20__

S.NO. COA ACCOUNT NAME DEBIT $ CREDIT $

1 1 Cash 32,720
2 4 Account Receivable 1,090
3 6 Prepaid Rent 6,000
4 7 Unexpired Insurance 2,700
5 8 Office Supplies 1,100
6 10 Rental Equipment 180,000
7 12 Accumulated Dep. – R. Equip. 1,500
8 20 Notes Payable 110,000
9 22 Account Payable 1,900
10 25 Interest Payable 825
11 26 Salaries Payable 900
12 29 Unearned Rental Fee 5,160
13 30 Anthony Ferrara, Capital 103,325

TOTAL 223,610 223,610

Tony’s Rental
Balance Sheet
As of September 20__

Assets

1 Cash $ 32,720
4 Account Receivable $ 1,090
6 Prepaid Rent $ 6,000
7 Unexpired Insurance $ 2,700
8 Office Supplies $ 1,100
10 Rental Equipment $ 180,000
12 Less: Accumulated Dep. – R. Equip. $ (1,500) $ 178,500

$ 222,110

Liabilities & Owner's Equity

22 Account Payable $ 1,900

25 Interest Payable $ 825
26 Salaries Payable $ 900
29 Unearned Rental Fee $ 5,160
20 Notes Payable $ 110,000
30 Anthony Ferrara, Capital $ 103,325

$ 222,110