Question

Please prepare the closing entry.

COMP4-1 (Algo) Recording Transactions (Including Adjusting and Closing Entries), Preparing Financial Statements, and Performing Ratio Analysis LO4-1, 4-2, 4-3, 4-4 (GL) Brothers Mike and Tim Hargenrater began operations of their tool and die shop (H & H Tool, Inc.) on January 1, 2019. The annual reporting period ends December 31. The trial balance on January 1, 2020, follows: Credit 16,000 H & H Tool, Inc. Trial Balance on January 1, 2020 Account Titles Debit Cash 8,000 Accounts receivable 7,000 Supplies 30,000 Land Equipment 97,000 Accumulated depreciation (on equipment) Other noncurrent assets (not 11,000 detailed to simplify) Accounts payable Wages payable Interest payable Dividends payable Income taxes payable Long-term notes payable Common stock (8,000 shares, $.50 par value) Additional paid-in capital Retained earnings Service revenue Depreciation expense Supplies expense Wages expense Interest expense Income tax expense Miscellaneous expenses (not detailed to simplify) Totals 153,000 4,000 99,000 34,000 153,000 Transactions during 2020 follow: a. Borrowed $20,000 cash on a 5-year, 6 percent note payable, dated March 1, 2020 b. Purchased land for a future building site on March 15, 2020; paid cash, $22,000. c. Earned $332,000 in revenue. Transactions dated August 30, 2020, including $68,000 on credit and the rest in cash. d. Sold 4,000 additional shares of capital stock for cash at $1 market value per share on January 1, 2020. e. Incurred $107,000 in wages expense and $44,000 in miscellaneous expenses for 2020, with $39,000 on credit and the rest paid in cash. f. Collected accounts receivables on November 10, 2020, $43,000. g. Purchased other assets on November 15, 2020, $17,000 cash. h. Purchased supplies on account for future use on December 1, 2020, $42.000. i. Paid accounts payable on December 15, 2020, $41,000. j. Signed a three-year $48,000 service contract on December 17, 2020 to start February 1, 2021. k. Declared cash dividends on December 20, 2020, $23,000, which were paid by December 31.

Answer 1

Credit Debit 332,000 Closing JES No. Date Acccount 1 31-Dec Service revenue Depreciation expense Supplies expense Wages expense Interest expense Income tax expense Miscellaneous expense Retained Earnings 18,000 39,000 127,000 1,000 17,000 44,000 86,000

H & H Tool, Inc. Journal entries No. Date Acccount a 1-Mar Cash Long term Notes Payable Credit Calculation Debit 20,000 20,000 b 22,000 15-Mar Land Cash 22,000 c 30-Aug Cash Accounts Receivable Service revenue 264,000 68,000 332,000 d 4,000 1-Jan Cash Common stock Additional paid in capital -4,000*1 -4,000*0.50 2,000 2,000 e 107,000 44,000 31-Dec Wages expense Miscellaneous expense Cash Accounts Payable 39,000 112,000 43,000 f 10-Nov Cash Accounts Receivable 43,000 17,000 g 15-Nov Other Noncurrent assets Cash 17,000 h 42,000 1-Dec Supplies Accounts Payable 42,000 i 41,000 15-Dec Accounts Payable Cash 41,000 į 17-Dec No entry k 23,000 20-Dec Retained Earnings Dividends Payable 23,000 23,000 23,000 k 31-Dec Dividends Payable Cash Adjusting JES I 31-Dec Supplies expense Supplies 39,000 =30,000+42,000-33,000 39,000 m 18,000 31-Dec Depreciation expense Accumulated Depreciation-Equipment 18,000 n 1,000 =20,000*6%*10/12 31-Dec Interest expense Interest Payable 1,000 20,000 o 31-Dec Wages expense Wages Payable 20,000 p 17,000 31-Dec Income tax expense Income Taxes Payable 17,000

Ref Date Ref Debit Credit Land $ . $ 22,000 Beg bal 1 H & H Tool, Inc. T Accounts Date Debit Credit Ref Date Debit Credit Ref Date Debit Credit Cash Accounts Receivable Supplies Beg bal $ 8,000 Beg bal $ 7,000 Beg bal $30,000 $ 20,000 $ 22,000 b $ 68,000 $ 43,000 f h $ 42,000 $ 264,000 $ 39,000 e $ 39,000 d $ 4,000 $ 17,000 g $ 43,000 $ 41,000 i $ 23,000 k End Bal. $ 197,000 End Bal. $ 32,000 End Bal. $33,000 Equipment Accum. Depr. - Equipment Other Noncurrent assets Beg bal $ 97,000 Beg bal $ 16,000 Beg bal $11,000 $ 18,000 m g $ 17,000 e h p End Bal. $ 97,000 Wages Payable Beg bal $ 20,0000 End Bal. $ 20,000 Long term Notes Payable Beg bal $ 20,000 a End Bal. $ 20,000 Service revenue $332,000 c 1 $332,000 End Bal. End Bal. $ 34,000 Interest Payable Beg bal $ - $ 1,000 n End Bal. $ 1,000 Common Stock Beg bal $ 4,000 $ 2,000 d End Bal. $ 6,000 Depreciation expense m $ 18,000 $ 18,000 1 End Bal. $ Income tax expense p $ 17,000 $ 17,000 1 End Bal. $ - End Bal. $ 28,000 Dividends Payable Beg bal k $ 23,000 $ 23,000 k End Bal. $ Additional paid in capital Beg bal $ 99,000 $ 2,000 d End Bal. $ 101,000 Supplies expense $ 39,000$ 39,000 i End Bal. $ 22,000 Accounts Payable Beg bal $ 41,000 $112,000 $ 42,000 End Bal. $113,000 Income Tax Payable Beg bal $ 17,000 End Bal. $ 17,000 Retained Earnings Beg bal $ 34,000 k $ 23,000 $ 86,000 End Bal. $ 97,000 Wages expense e $ 107,000 $ 20,000 $127,000 End Bal. $ - 1 1 Interest expense n $ 1,000 $ 1,000 End Bal. $ - End Bal. $ - Miscellaneous expense $ 44,000 $ 44,000 End Bal. $ . 1 1

Adjusted TB Debit Credit 197,000 32,000 33,000 22,000 97,000 34,000 28,000 113,000 20,000 1,000 H & H Tool, Inc. Account Cash Accounts Receivable Supplies Land Equipment Accumulated Depreciation-Equipment Other Noncurrent assets Accounts Payable Wages Payable Interest Payable Dividends Payable Income Taxes Payable Long term Notes Payable Common stock Additional paid in capital Retained Earnings Service revenue Depreciation expense Supplies expense Wages expense Interest expense Income tax expense Miscellaneous expense Totals 17,000 20,000 6,000 101,000 11,000 332,000 18,000 39,000 127,000 1,000 17,000 44,000 655,000 655,000