Question

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):

Account Titles	Debit			Credit
Cash	$	4
Accounts Receivable		4
Supplies		11
Land		0
Equipment		62
Accumulated Depreciation				$	7
Software		18
Accumulated Amortization					7
Accounts Payable					6
Notes Payable (short-term)					0
Salaries and Wages Payable					0
Interest Payable					0
Income Tax Payable					0
Common Stock					72
Retained Earnings					7
Service Revenue		0
Salaries and Wages Expense		0
Depreciation Expense		0
Amortization Expense		0
Income Tax Expense		0
Interest Expense		0
Supplies Expense		0
Totals	$	99		$	99

Transactions and events during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $13 cash on March 1 using a short-term note.
2. Purchased land on March 2 for future building site; paid cash, $7.
3. Issued additional shares of common stock on April 3 for $25.
4. Purchased software on July 4, $12 cash.
5. Purchased supplies on account on October 5 for future use, $17.
6. Paid accounts payable on November 6, $14.
7. Signed a $30 service contract on November 7 to start February 1, 2019.
8. Recorded revenues of $164 on December 8, including $42 on credit and $122 collected in cash.
9. Recognized salaries and wages expense on December 9, $87 paid in cash.
10. Collected accounts receivable on December 10, $26.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $7.
12. Supplies counted on December 31, 2018, $11.
13. Depreciation for the year on the equipment, $7.
14. Interest of $2 to accrue on notes payable.
15. Salaries and wages earned but not yet paid or recorded, $11.
16. Income tax for the year was $9. It will be paid in 2019
17. 3, 5 and 8. Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions (a)-(j), adjusting entries (k)-(p1), and closing entry. (Enter your answers in thousands of dollars.)

Answer 1

H & H Tool, Inc. Journal entries No. Account Cash Notes Payable (shortterm) Credit Calculation Debit 13 13 Land Cash Cash Common stock Software Cash Supplies Accounts Payable Accounts Payable Cash No entry Cash Accounts Receivable Service revenue 122 42 87 Salaries & Wages expense Cash 26 Cash Accounts Receivable Adjusting JES Amortisation expenses Accumulated Amortisation =17+11-11 Supplies expense Supplies m 7 Depreciation expense Accumulated Depreciation Interest expense Interest Payable Salaries & Wages expense Salaries & Wages Payable Income tax expense Income Tax Payable 164 Closing JES Service revenue Salaries & Wages expense Supplies expense Depreciation expense Amortisation expenses Interest expense Income tax expense Retained Earnings

Credit Date Date Credit Date Debit Date Land Debit Date Credit Accounts Receivable $ 4 $ 42 $ 26 Debit Date Supplies $ 11 $ 17 Op bal Op bal . Op bal e $ $ 7 H & H Tool, Inc. T Accounts Date Debit Date Cash Op bal $ 4 $ 13b $ 25 d h $ 1221 $ 26 i Bal. $ 70 Equipment Op bal $ 62 $ $ $ 7 12 14 $ 17 Bal. Bal. $ 62 Accounts Payable $ 14 Op bal Bal. Accum. Amortisation - Software Op bal $ 7 $ 7 Bal. $ 14 Interest Payable Op bal $ . $ 2 Bal. $ 2 $ $ $ 6 17 9 . 11 11 Bal. Income Tax Payable Op bal $ 20 Accum. Depr. - Equipment Op bal $ $ Bal. $ Notes Payable (shortterm) Op bal $ a $ Bal. $ Common Stock Op bal $ $ Bal. $ Salaries & Wages expense $ 87 $ 11 1 $ $ . Interest expense $ 2 1 $ $ - Bal. $ 11 Software 7 Op bal $ 18 7 d $ 12 14 Bal. $ 30 Salaries & Wages Payable Op bal $ 13 O $ 13 Bal. $ Retained Earnings 72 Op bal $ 25 1 $ 97 Bal. $ Depreciation expense $ 7 98 1 $ Bal. $ - I Supplies expense 2 $ 171 $ Bal. $ - $ . 7 24 31 9 164 i Amortisation expenses $ 7 $ 7 7 Bal. $ Service revenue h $ $ 164 Bal. $ Income tax expense $ 9 1 $ $ - Bal. Bal. 9 17 p Bal. n Bal.

Opening TB Debit Credit Unadjusted TB Debit Credit Adjusted TB Debit Credit Post Closing TB Debit Credit H & H Tool, Inc. Account Cash Accounts Receivable Supplies Land Equipment Accumulated Depreciation Software Accumulated Amortisation Accounts Payable Notes Payable (shortterm) Salaries & Wages Payable Interest Payable Income Tax Payable Common stock Retained Earnings Service revenue Salaries & Wages expense Supplies expense Depreciation expense Amortisation expenses Interest expense Income tax expense Totals 164 164 99 99 304 304 340 340 200 200