Question

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.)...

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 $ 3
Accounts Receivable 5
Supplies 12
Land 0
Equipment 69
Accumulated Depreciation $ 6
Software 24
Accumulated Amortization 4
Accounts Payable 5
Notes Payable (short-term) 0
Salaries and Wages Payable 0
Interest Payable 0
Income Tax Payable 0
Common Stock 90
Retained Earnings 8
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 $ 113 $ 113

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

  1. Borrowed $12 cash on March 1 using a short-term note.
  2. Purchased land on March 2 for future building site; paid cash, $9.
  3. Issued additional shares of common stock on April 3 for $23.
  4. Purchased software on July 4, $10 cash.
  5. Purchased supplies on account on October 5 for future use, $18.
  6. Paid accounts payable on November 6, $13.
  7. Signed a $25 service contract on November 7 to start February 1, 2019.
  8. Recorded revenues of $178 on December 8, including $49 on credit and $129 collected in cash.
  9. Recognized salaries and wages expense on December 9, $94 paid in cash.
  10. Collected accounts receivable on December 10, $33.

Data for adjusting journal entries as of December 31:

  1. Unrecorded amortization for the year on software, $4.
  2. Supplies counted on December 31, 2018, $10.
  3. Depreciation for the year on the equipment, $6.
  4. Interest of $1 to accrue on notes payable.
  5. Salaries and wages earned but not yet paid or recorded, $12.
  6. Income tax for the year was $8. It will be paid in 2019.
  1. 1, 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)-(p), and closing entry. (Enter your answers in thousands of dollars.)

  2. Record the adjusting journal entries (k) through (p). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)
  3. Prepare an unadjusted trial balance. (Enter your answers in thousands of dollars.)
  4. Post the adjusting entries from requirement 4 and prepare an adjusted trial balance.
  5. 6-a. Prepare an income statement.

  6. 6-b. Prepare the statement of retained earnings.

  7. 6-c. Prepare the balance sheet.

  8. Prepare the closing journal entry. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)
  9. Post the closing entry from requirement 7 and prepare a post-closing trial balance. (Enter your answers in thousands of dollars.)
  10. 9-a. How much net income did H & H Tool, Inc., generate during 2018? What was its net profit margin?

  11. 9-b. Is the company financed primarily by liabilities or stockholders’ equity?

  12. 9-c. What is its current ratio?

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Answer #1

Note - As per HomeworkLib guidlines we are allowed to process 1 question at a time. When there are multiple questions we can do 1st one. Also only 4 sub-questions in a single question.

1. Journal Entries -

Date Credit H & H Tool, Inc. Journal Entries Accounts Title Debit Cash $ 12 Notes Payable (Short Term) (Being Short term Note

2. Ledgers -

Cash Interest Payable Op Bal 9 b а 10 $ 1 $ $ $ $ $ с 3 $ 12$ 23 $ 120$ 24 d f 13 85 i cl Bal S 1 h j Cl Bal 65 Income Tax Pa

3. Unadjusted Trial Balance -

Credit H & H Tool, Inc. Unadjusted Trial Balance Accounts Title Debit Cash $ 65 Accounts Receivable $ 21 Supplies $ 30 Land $

4. Adjusting Entries -

Date k H & H Tool, Inc. Adjusting Entries Accounts Title Debit Credit Amortisation Expense $ 5 Accumulated Amortisation $ (Be

5. Adjusted Trial Balance -

Credit $ $ 12 10 10 H & H Tool, Inc. Adjusted Trial Balance Accounts Title Debit Cash $ 65 Accounts Receivable $ 21 Supplies

6. Income Statement -

H & H Tool, Inc. Income Statement December 31 $000 $000 $ 160 Service Revenue 97 6 5 Expenses: Salaries and Wages Expense D

7. Statement of Retained Earnings -

H & H Tool, Inc. Statement of Retained Earnings December 31 Retained Earnings, Opening Add: Net Income $ Less: Dividends $ $

8. Balance Sheet -

H & H Tool, Inc. Balance Sheet December 31 Assets Current Assets: Cash Accounts Receivable Supplies Total Current Assets $ $

9. Closing Entries -

Date H & H Tool, Inc. Closing Entries Accounts Title Debit Credit Service Revenue $ 160 Income Summary $ 160 (To Record closi

10. Post Closing Trial Balance -

Credit $ 12 H & H Tool, Inc. Post Closing Trial Balance Accounts Title Debit Cash $ 65 Accounts Receivable $ 21 Supplies $ 20

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