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	$	4
Accounts Receivable		4
Supplies		11
Land		0
Equipment		56
Accumulated Depreciation				$	7
Software		17
Accumulated Amortization					4
Accounts Payable					6
Notes Payable (short-term)					0
Salaries and Wages Payable					0
Interest Payable					0
Income Tax Payable					0
Common Stock					68
Retained Earnings					7
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	$	92		$	92

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

1. Borrowed $13 cash on March 1 using a short-term note.
2. Purchased land on March 2 for future building site; paid cash, $7.
3. Issued additional shares of common stock on April 3 for $28.
4. Purchased software on July 4, $12 cash.
5. Purchased supplies on account on October 5 for future use, $17.
6. Paid accounts payable on November 6, $14.
7. Signed a $30 service contract on November 7 to start February 1, 2019.
8. Recorded revenues of $152 on December 8, including $36 on credit and $116 collected in cash.
9. Recognized salaries and wages expense on December 9, $81 paid in cash.
10. Collected accounts receivable on December 10, $20.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $4.
12. Supplies counted on December 31, 2018, $11.
13. Depreciation for the year on the equipment, $7.
14. Interest of $2 to accrue on notes payable.
15. Salaries and wages earned but not yet paid or recorded, $13.
16. Income tax for the year was $9. 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.)

Answer 1

Closing Entries
Particulars			Debit	Credit
Service Revenue			$ 152.00
To Income Summary				$ 152.00
Income Summary			$ 122.00
To Salaries and Wages Expense				$   94.00
To Depreciation Expense				$      7.00
To Amortization Expense				$      4.00
To Interest Expense				$      2.00
To Supplies Expense				$      6.00
To Income Tax Expense				$      9.00
Income Summary			$   30.00
To Retained Earnings				$   30.00

Workings:

Service Revenue				$ 152.00
Salaries and Wages Expense			$   94.00
Depreciation Expense			$      7.00
Amortization Expense			$      4.00
Income Tax Expense			$      9.00
Interest Expense			$      2.00
Supplies Expense			$      6.00	$ 122.00
		Net Income		$   30.00