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) Debit Credit Account Titles $ Cash 2 Accounts Receivable 6 Supplies 13 Land 0 Equipment Accumulated Depreciation Software Accumulated Amortization 70 $ 5 15 5 Accounts Payable Notes Payable (short- term) Salaries and Wages Payable Interest Payable Income Tax Payable 4 Common Stock 83 Retained Earnings 9 Service Revenue Salaries and Wages Expense Depreciation Expense Amortization Expense Income Tax Expense Interest Expense 0 0 Supplies Expense $106 $106 Totals

Answer 1

($ in 000s) Debit Credit $11 $11 $24 $24 $11 $19 $19 Step 1 Journal entry for Transaction for 2018 Date Particulars 1-Mar-18 Cash Notes Payable (To Record borrowing of cash) 2-Mar-18 Land Cash (To Record purchase of land) 3-Apr-18 Cash Common Stock (To Record issue of common sck) 4-Jul-18 Software Cash (To Record purchase of software) 5-Oct-18 Supplies Accounts Payable (To Record purchase of supplies) 6-Nov-18 Accounts Payable Cash (To Record payment made) 7-Nov-18 No Entry No Entry (On signing of service contract) 8-Dec-18 Accounts Receivable Cash Service Revenue (To Record sales) 9-Dec-18 Salaries and Wages Expense Cash (To Record salary expense) 10-Dec-18 Cash Accounts Receivable (To Record payment received) $12 $50 $130 $180 $95 $95 $34 $34

Step 2 Adjusting Entries ($ in 000s) Debit Credit $5 $5 $20 $20 Date Particulars 31-Dec-18 Amortisation Expense Accumulated Amortisation (To Record Amortisation on sofware) 31-Dec-18 Supplies Expesne Supplies (To Record supplies Expense) 31-Dec-18 Depreciation Expense Accumulated Depreciation (To Record Depreciation on Equipment) 31-Dec-18 Interest Expense Interest Payable To Record interest accrue on notes payable) 31-Dec-18 Salaries and Wages Expense Salaries and Wages Payable (To Record interest accrue on notes payable) 31-Dec-18 Income Tax Expense Income Tax Payable (To Record income tax provision) $13 Working Supplies Expense 1 Supplies Opening as on 01/01/2018 Add: Purchases $13 $19 $32 ($12) $20 Less: Closing as on 31/12/2018 Supplies Expense

Step 3 Hand H Tool Inc ($ in 000s) Trial Balance January 1, 2018 Debit Credit Entry Adjustment Adjusted Trail Balance December 31, 2018 Debit Credit $75 Debit $199 Credit $126 $50 Particulars Cash Accounts Receivable Supplies Land Equipment Accumulated Depreciation Software Accumulated Amortisation Accounts Payable Notes Payable Salaries and Wages Payable Interest Payable Income Tax Payable Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Depreciation Expense Amortisation Expense Interest Expense Income Tax Expense Supplies Expesne $180 %%%%%%% $106 $106 $445 $445 $359

Amount $180 Ans 6A Hand H Tool Inc Income Statement For the year ended 31st December 2018 ($ in 000s) Particulars Amount Service Revenue Less: Operating Expense Salaries and Wages Expense $108 Depreciation Expense Amortisation Expense Interest Expense Supplies Expesne Total Operating Expense Operating Income Less: Income Tax Expense Net Income yo ($139) $41 ($7) $34 Ans 6B Hand H Tool Inc Statement of Retained Earnings For the year ended 31st December 2018 ($ in 000s) Particulars Balance January 1, 2018 Net Income for the year ended 31st December 2018 Amount $34 Balance December 31, 2018

Ans 6C Amount Assets Cash Accounts Receivable Supplies Hand H Tool Inc Balance Sheet December 31, 2018 ($ in 000s) Amount Amount Liabilities $75 Accounts Payable $22 Notes Payable $12 Salaries and Wages Payable Interest Payable Income Tax Payable $11 $11 Total Current Assets $109 Total Current Liabilities Land Equipment Less: Accumulated Depreciation $70 ($10) $8 Shareholders' Equity Common Stock Retained Earnings $60 Total Shareholders' Equity $107 $43 $150 Software Less: Accumulated Amortisation $26 ($10) $16 Total Assets $193 Total Liabilities and Shareholder's Equity $193