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 $ 3
Accounts Receivable 5
Supplies 12
Land 0
Equipment 52
Accumulated Depreciation $ 6
Software 22
Accumulated Amortization 8
Accounts Payable 5
Notes Payable (short-term) 0
Salaries and Wages Payable 0
Interest Payable 0
Income Tax Payable 0
Common Stock 67
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 $ 94 $ 94

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 $32.
  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 $144 on December 8, including $32 on credit and $112 collected in cash.
  9. Recognized salaries and wages expense on December 9, $77 paid in cash.
  10. Collected accounts receivable on December 10, $16.

Data for adjusting journal entries as of December 31:

  1. Unrecorded amortization for the year on software, $8.
  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.

2. 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.)

Cash Accounts Receivable 3 16X Beg. Bal. (a) (h) 9% 77 10 Beg. Bal. |(h) 32 12 112 32 16 13 End. Bal. 21 End. Bal. 66Supplies 12 18 Beg. Bal. (e) 20 % End. Bal. 10Beg. Bal. Accounts Payable 13 5 18 (e) End. Bal. 10Retained Earnings Beg. Bal. 8 24 X CE1 End. Bal. 32L Beg. Bal. (e) Supplies Expense 0 20 20 Ⓡ CE1 End. Bal. L 0

3. Prepare an unadjusted trial balance. (Enter your answers in thousands of dollars.)

H & H TOOL, INC. Unadjusted Trial Balance At December 31, 2018 (in thousands) Account Titles Debit Credit Cash Accounts Recei

5. Post the adjusting entries from requirement 4 and prepare an adjusted trial balance. (Enter your answers in thousands of dollars.)

Adjusted Trial Balance (in thousands) Account Titles Credit Cash Debit $ 66 21 10 Accounts Receivable [ Supplies Land 9 52 Eq

6-c. Prepare the balance sheet.

Assets Current Assets H & H TOOL, INC. Balance Sheet At December 31, 2018 (in thousands) Liabilities Current Liabilities 66 A

8. Post the closing entry from requirement 7 and prepare a post-closing trial balance. (Enter your answers in thousands of dollars.)

Credit For the Year Ended December 31, 2018 (in thousands) Account Titles Debit Cash $ 66 Accounts Receivable 21 Supplies 10

9-c. What is its current ratio?

Numerator Current Ratio Total Stockholders Equity Total Liabilities $ $ 122 43 2.84 Denominator

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Answer #1

H & H Tool, Inc. Journal entries No. Account Cash Notes Payable (shortterm) Debit Credit Calculation 12 12 Land Cash Cash ComCredit Date Date Credit Date Debit Credit Date Land Debit Date Credit Accounts Receivable $ 5 $ 32 $ 16 Debit Date Supplies $Unadjusted TB Debit Credit Adjusted TB Debit Credit Post Closing TB Debit Credit H & H Tool, Inc. Account Cash Accounts ReceiH & H Tool, Inc. Income Statement For the Year Ended December 31, 2018 Service revenue Expenses Salaries & Wages expense SuppH & H Tool, Inc. Balance Sheet As of December 31, 2018 Assets Current Assets Cash Accounts Receivable Supplies Total Current

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