Backhoe Rental

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JACKSON EQUIPMENT RENTAL COMPANY

On August 1, 2006, Jackson Equipment Rental Company was formed by Sam and John Jackson. Jackson’ Chart of Accounts appears below:

CashIncome Taxes Payable
Accounts ReceivableIncome Tax Expense
Prepaid Rent
Unexpired InsuranceSam Jackson, Capital
Office Supplies InventoryIncome Summary
Rental Equipment InventoryEarned Rental Fees
Accumulated Depreciation:Salaries Expense
Rental EquipmentMaintenance Expense
Notes PayableUtilities Expense
Accounts PayableRent Expense
Interest PayableOffice Supplies Expense
Salaries PayableDepreciation Expense
Sam Jackson, DrawingInterest Expense
Unearned Rental Fees

Jackson closes its accounts and prepares financial statements monthly. The following were the company’s August transactions:

1.8/1Sam Jackson contributed $100,000 cash to start the business.
2.8/1Purchased all of the rental equipment of a recently closed equipment rental
equipment company for $180,000. Paid $70,000 cash and signed a one-year note
payable to the owner, Ralph Bass, for $110,000.
3. 8/1Paid 3 months rent in advance of $9,000 for the building and yard to Sharks
Realty.
4. 8/4Purchased $2,000 office supplies on account from Sayes Office Supply. Payment
is due in 30 days. These supplies are expected to last 4 months.
5.8/8McCumber Company paid $20,000 cash as an advance payment on rental
equipment.
6. 8/12 Paid Salaries for the first two weeks of August: $4,100.
7.8/15Earned equipment rental fees for the first 15 days of August of $9,000. A total
of $8,000 of this amount was received in cash. This does not include the
McCumber account.
8.8/17Purchased $500 of payloader repair parts from Davis Tractor Company. Parts
were needed to repair a payloader. Payment is due in 10 days.
9. 8/23Received a payment of $300 on the amount due from August 15.
10.8/26Rented a backhoe to Jacobs Plumbing company at $100 per day. Payment
is due when the backhoe is returned in 2 weeks.
11.8/26Paid bi-weekly salaries of $4,100.
12.8/27Paid the amount owed to Davis Tractor Company.
13. 8/28 Sam Jackson withdrew $4,000 for his personal use.

JACKSON EQUIPMENT RENTAL COMPANY

14.8/29Jacobs Plumbing left the rented backhoe inside a locked fence at a construction
site of the prime contractor Ellis Construction. A 12 year old boy climbed the
fence and broke his leg playing on the backhoe. Jackson, Jacobs and Ellis have
been sued for by the parents for $50,000. The extent of Jackson’s liability
cannot be reasonably determined.
15.8/29Jackson purchased a one year liability insurance policy for $2,700. The policy
period begins September 1.
16.8/30Received a $600 utility bill for August. Payment due in 30 days.
17.8/30Equipment rental fees earned the last half of the month totaled $10,000.
Received cash payments for the total.

The following is information needed to prepare the company’s adjusting entries at the end of August:

1.The advance rent payment on August 1 was for three months.
2.There was $800 of accrued interest in August on the note payable.
3.Rental equipment is depreciated over 10 years on a straight-line basis.
4.Office supplies on hand at August 31 total $1,100.
5.During August, Jackson earned $12,000 of the rental fees McCumber paid in advance on September 8.
6.At August 31, Jackson earned 5 days of rent on the backhoe rented to Jacobs Plumbing.
7.Salaries earned but not paid since the last payroll date amount to $1,000.
8.Jackson’s estimated tax rate is 40% of its income before income taxes. Taxes will be paid September 15.

Instructions:

a.Journalize the above transactions.
b.Post the transactions to ledger (T) accounts.
c.Prepare a 10 column worksheet for the month ended August 31.
d.Prepare the Adjusting entries on needed on August 31 and post them to T-Accounts and Spreadsheet.
e.Prepare the August Income Statement, Statement of Owner’s Equity, and
Balance Sheet.
f.Prepare closing entries for August.

Often times it is indeed wiser to buy or hire certain types of equipments that can be used in any types of works. It will help you save much of your time and money because you no longer need to find another equipment to finish all of your tasks. One of the most important details of having a strong type of equipment is that you will no longer worry how to transfer heavy equipments in a small period of time. You can also protect your men from any sorts of danger if you are using reliable types of construction equipments such as back hoes.

There are some instances that you must consider if you are planning to have your own construction company in your place. It would be helpful if you know how to manage your very own company especially if you have a small budget to start on. The best thing about planning ahead about your dream company is that you will have the idea on the necessary things that you need to acquire for the possible success of your company.

The first thing that you need to consider is your budget. You must be very flexible with your budget because your future company mainly depends on your budget. If you have a good budget for your future company it is better if you are going to know the estimated proportion between your men and your construction equipments. It will prevent you from wasting your money on things that are no longer needed in your business.

Meanwhile if you have a small budget you must think of an alternative way to compensate the future of your business company. It is also wiser if you are going to start your business with a small number of people since you still need to observe if it is indeed feasible or not. It will help you and your company to improve gradually as time passes by.

The best way to compensate your small budget is to find another company where you can rent some of their construction equipments. You should also decide on what type of equipment you are going to rent in order for you to manage your budget. It is also wiser if you are going to settle in a single type of construction equipment such as backhoes.

Backhoes are proven to be the most versatile type of construction equipments at this present moment. You can use a back hoe if you need to transfer and carry heavy equipments which is impossible for humans to perform using their own strength. However the operators of your backhoes must have the knowledge and skills to manage this type of equipments to prevent any accidents.

There are several types of backhoes that can be used in different fields of work. The best thing about Backhoef Rental is that you can still manage to have your own company without spending too much. If you engaged in Backhoef Rental you will no longer worry about the maintenance of your construction equipments because it is already of the responsibility of the companies who offer such deals.

If you’ve been keeping up with my blog posts lately you’ll know I’ve come to adding a few news posts from around the web on this subject. I’ve got a couple more today that are new and updated, so let me know what you think of em…

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