Question

Required information The following information applies to the questions displayed below.J 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 Cash Accounts Receivable Supplies Land Equipment Accumulated Depreciation Software Accumulated Amortization Accounts Payable Notes Payable (short-term) Salaries and Wages Payable Interest Payable Income Tax Payable Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Depreciation Expense Amortization Expense Income Tax Expense Interest Expense Supplies Expense Totals Debit Credit 12 52 $ 6 67 $94 $94 Transactions and events during 2018 (summarized in thousands of dollars) follow: a. Borrowed $12 cash on March 1 using a short-term note. b. Purchased land on March 2 for future building site; paid cash, $9 c. Issued additional shares of common stock on April 3 for $32. d. Purchased software on July 4, $10 caslh e. Purchased supplies on account on October 5 for future use, $18 f Paid accounts payable on November 6, $13 g. Signed a $25 service contract on November 7 to start February 1, 2019 h. Recorded revenues of $144 on December 8, including $32 on credit and $112 collected in cash i. Recognized salaries and wages expense on December 9, $77 paid in cash j. Collected accounts receivable on December 10, $16 Data for adjusting journal entries as of December 31: k. Unrecorded amortization for the year on software, $8. l. Supplies counted on December 31, 2018, $10 m. Depreciation for the year on the equipment, $6 n. Interest of $1 to accrue on notes payable. o. Salaries and wages earned but not yet paid or recorded, $12 p. Income tax for the year was $8. It will be paid in 2019. 7. 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.) View transaction list Journal entry worksheet Record entry to close revenue and expense accounts to retained earnings Note: Enter debits before credits. Transaction General Journal Debit Credit View general journal Record entry Clear entry 8. Post the closing entry from requirement 7 and prepare a post-closing trial balance. (Enter your answers in thousands of dollars.) H & H TOOL, INC Post-Closing Trial Balance in thousands) Debit Credit Account Titles Cash Accounts Receivable Supplies Land Equipment Accumulated Depreciation Software Accumulated Amortization Accounts Payable Notes Payable (short-term) Salaries and Wages Payable Interest Payable Income Tax Payable Common Stock Retained Earnings Dividends Service Revenue Salaries and Wages Expense Supplies Expense Depreciation Expense Amortization Expense Interest Expense Income Tax Expense Totals 0 9-a. How much net income did H & H Tool, Inc., generate during 2018? What was its net profit margin? 9-b. Is the company financed primarily by liabilities or stockholders' equity? 9-c. What is its current ratio? Complete this question by entering your answers in the tabs below. Req 9A Req 9B Req 9c How much net income did H & H Tool, Inc., generate during 2018? What was its net profit margin? (Enter "Net Income" in thousands of dollars. Round "Net Profit Margin" to 1 decimal place.) Net Income Net Proft Margin Req 9A Req 9B > 9-a. How much net income did H&H Tool, Inc., generate during 2018? What was its net profit margin? 9-b. Is the company financed primarily by liabilities or stockholders' equity? 9-c. What is its current ratio? Complete this question by entering your answers in the tabs below. Req 9C Req 9A Req 9B Is the company financed primarily by liabilities or stockholders' equity? Stockholders' Equity Liabilities Req 9A Req 9c> 9-a. How much net income did H&H Tool, Inc., generate during 2018? What was its net profit margin? 9-b. Is the company financed primarily by liabilities or stockholders' equity? 9-c. What is its current ratio? Complete this question by entering your answers in the tabs below. Req 9A Req 9BReq 90 What is its current ratio? (Enter your answers in thousands of dollars.) Current Ratio Numerator Denominator Req 9B Req 9C

Answer 1

$ in 000s) Step 1 Journal entry for Transaction for 2018 Credit Debit Particulars Date $12 1-Mar-18 Cash $12 Notes Payable To Record borrowing of cash 59 2-Mar-18 Land Cash 59 To Record purchase of land 532 3-Apr-18 Cash 532 Common Stock To Record issue of common sck $10 4-Jul-18 Software $10 Cash To Record purchase of software $18 19-0ct-18 Supplies $18 Accounts Payable (To Record purchase of supplies) $13 6-Nov-18 Accounts Payable $13 Cash (To Record payment made) 7-Nov-18No Entry No Entry (On signing of service contract) $32 $112 8-Dec-18 Accounts Receivable Cash Service Revenue $144 To Record sales 577 9-Dec-18Salaries and Wages Expense 577 Cash To Record salary expense) $16 10-Dec-18 Cash $16 Accounts Receivable To Record salary expense)

Step 2 Adjusting Entries Particulars Debit Credit Date 58 31-Dec-18 Amortisation Expense 58 Accumulated Amortisation To Record Amortisation on sofware $20 31-Dec-18 Supplies Expesne $20 Supplies (To Record supplies Expense) 56 31-Dec-18 Depreciation Expense 56 Accumulated Depreciation (To Record Depreciation on Equipment) 51 31-Dec-18 Interest Expense S1 Interest Payable (To Record interest accrue on notes payable) $12 31-Dec-18 Salaries and Wages Expense $12 Salaries and Wages Payable (To Record interest accrue on notes payable) 58 31-Dec-18 Income Tax Expense 58 Income Tax Payable To Record income tax provision Working Supplies Expense $12 $18 $30 $10 S20 1Supplies Opening as on 01/01/2018 Add: Purchases Less: Closing as on 31/12/2018 Supplies Expense

Step3 Ans 8 H and H Tool Inc ($ in 000s) Trial Balance January 1, 2018 Adjusted Trail Balance Post Closing Trail Balance December 31, 2018 Entry Adjustment Impact of Closing Entries December 31, 2018 Credit 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 Credit Credit Credit Credit Debit Debit $172 532 518 $109 $16 $21 $10 59 $21 $10 $12 $12 $12 $10 532 532 $16 $10 $12 $12 $16 $10 S12 512 $13 $18 S12 S12 50 532 50 S12 $20 $144 $144 $144 50 50 50 50 50 50 50 $1 50 $20 $386 $386 S322 S322 $144 $144 $190 $190 $94

Step 4 H and H Tool Inc Income Statement For the year ended 31st December 2018 (S in 000s Particulars Service Revenue Less: Operating Expense Amount Amount 144 $89 $6 58 $1 $20 Salaries and Wages Expense Depreciation Expense Amortisation Expense Interest Expense Supplies Expesne ($124) $20 tal Operating Expense Operating Income Less: Income Tax Expense Net Income S12 Step 5 H and H Tool Inc Statement of Retained Earnings For the year ended 31st December 2018 (S in 000s Particulars Retained Earnings at 1st January 2018 Net Income for the year ended 31st December 2018 Dividend paid shareholders Retained Earnings at 31st December 2018 Amount 58 $12 50 S20

Step 6 H and H Tool Inc Balance Sheet December 31, 2018 (S in 000s Amount Liabilities Assets Cash Accounts Receivable Supplies Amount Amount 566 Accounts Payable $21 Notes Payablee $10 Salaries and Wages Payable S10 $12 $12 $1 58 Interest Payable Income Tax Payable $97 Total Current Liabilities 59 Shareholders' Equity $43 Total Current Assets Land Equipment Less: Accumulated Depreciation 552 $12 $99 $20 $119 Common Stock Retained Earnings $40 Total Shareholders' Equit $32 $16 Software Less: Accumulated Amortisation S16 $162 Total Liabilities and Shareholder's Equi $162 Total Assets

Step 7 Closing Entries Date Particulars Credit Debit 144 31-Dec-18 Service Revenue 5144 Income Summary To close Service Revenue Account) $132 31-Dec-18 Income Summary $89 56 58 $1 58 $20 Salaries and Wages Expense Depreciation Expense Amortisation Expense Interest Expense Income Tax Expense Supplies Expesne To close all expense accounts) $12 31-Dec-18 Income Summary $12 Retained Earnings To close the Income Summary Account)

$12 8.3% Ans 9A Net Income (S in 000s) Net Profit margin [$12/$144] The company is financed primarily by Shareholder's Equity. This is evident from the balance sheet. Liabilitis is $43 whereas Shareholders' Equity is 119 Ans 9B Ans 9CCurrent Ratio $97 2.26 $43 Numerator Current Assets Denominator Current Liabilities