Question

[The following information applies to the questions displayed below) Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc) on January 1, 2013. The annual reporting period ends December 31. The trial balance on January 1, 2015, follows (the amounts are rounded to thousands of dollars to simplify: Credit Debit $ 3 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 Eamings Service Revenue Salaries and Wages Expense Depreciation Expense Amortization Expense Income Tax Expense Interest Expense Supplies Expense 0.00000 OOOOOO Totals Transactions during 2015 (summarized in thousands of dollars) follow 1. Borrowed $12 cash on a six-month note payable dated March 2015 2 Purchased land for future building site: paid cash, S9. 3. Eamed revenues for 2015, 5178. Including $49 on credit and $129 collected in cash 4. Issued additional shores of stock for $3. 5. Recognized solaries and wages expense for 2015, S94 pod in cash. 6. Collected accounts receivable. $33. 7. Purchated software. $10 cash 8. Pald accounts payable $13. 9 Purchased supplies on account for future use. 518 10. Signed a $25 service contract to start February 1, 2016 Dato for utong journal entries: 11. Unrecorded amortization for the year on software. $4 12. Supples counted on December 31, 2015 $10. 13. Depreciation for the year on the equipment S6 14. Accrued interest of $1 on notes payable 15. Salanes and wages earned but not yet paid or recorded, $12 16. Income tax for the year was $8 it will be paid in 2016

Answer 1

Prepare journal entries as follows:

Trn.	Account Title	Debit	Credit
1	Cash	$12
	Note payable		$12
2	Land	$9
	Cash		$9
3	Cash	$129
	Accounts receivable	$49
	Service revenue		$178
4	Cash	$3
	Common stock		$3
5	Salaries and wage expense	$94
	Cash		$94
6	Cash	$33
	Accounts receivable		$33
7	Software	$10
	Cash		$10
8	Accounts payable	$13
	Cash		$13
9	Supplies	$18
	Accounts payable		$18
10	No entry
	Adjusting Entry
11	Amortization expense	$4
	Accumulated Amortization		$4
12	Supplies expense ($12-$10)	$2
	Supplies		$2
13	Depreciation expense	$6
	Accumulated Depreciation-Equipments		$6
14	Interest expense	$1
	Interest payable		$1
15	Salaries and wage expense	$12
	Salaries and wage payable		$12
16	Income tax expense	$8
	Income tax payable		$8

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Prepare Income statement as follows:

Income statement
Service revenue		$178
Less: Operating expense
Salaries and wage expense	$94
Depreciation expense	$6
Amortization expense	$4
Interest expense	$1
Supplies expense	$2
Income tax expense	$8	$115
Net Income		$63

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Prepare statement of retained earnings as follows:

Statement of Retained Earnings
Beginning bal.	$8
Add: Net Income	$63
Ending bal.	$71