Question

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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):

Account Titles	Debit			Credit
Cash	$	2
Accounts Receivable		6
Supplies		13
Land		0
Equipment		67
Accumulated Depreciation				$	5
Software		21
Accumulated Amortization					7
Accounts Payable					4
Notes Payable (short-term)					0
Salaries and Wages Payable					0
Interest Payable					0
Income Tax Payable					0
Common Stock					84
Retained Earnings					9
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	$	109		$	109

Transactions during 2015 (summarized in thousands of dollars) follow:
1.	Borrowed $11 cash on a six-month note payable dated March 1, 2015.
2.	Purchased land for future building site; paid cash, $8.
3.	Earned revenues for 2015, $174, including $47 on credit and $127 collected in cash.
4.	Issued additional shares of stock for $4.
5.	Recognized salaries and wages expense for 2015, $92 paid in cash.
6.	Collected accounts receivable, $31.
7.	Purchased software, $11 cash.
8.	Paid accounts payable, $12.
9.	Purchased supplies on account for future use, $19.
10.	Signed a $20 service contract to start February 1, 2016.
Data for adjusting journal entries:
11.	Unrecorded amortization for the year on software, $7.
12.	Supplies counted on December 31, 2015, $12.
13.	Depreciation for the year on the equipment, $5.
14.	Accrued interest of $1 on notes payable.
15.	Salaries and wages earned but not yet paid or recorded, $13.
16.	Income tax for the year was $7. It will be paid in 2016.

Prepare an income statement.

Prepare a statement of retained earnings.

Prepare balance sheet

Answer 1

Solution to the Reuirements as follows:

HRH Tool, Inc Working sheet Amount in (ooo) Tunadjusted Adjurting Ad; usted Trial Balance Entries Trial Balance a Accougt Titler Debit Credit Debit Credit Denit credit] Cash 2 1173 123 152 Account Receivable 47 37 22 Supplies 113 Cand & Equipment Accumulated Depreciation Software Accumulated Amortization Account payable Hokes payable short Term) salaries and wager payable Interest payable Income Tax payable Commonsteck 88 Retained Earnings 9 Service Revenue 174 Salarles and wages Expo Depreciation Experre Amortization Expense Income Tax Expense Interest Expeare Supplies Expense 4 1 Totals 109 109 395 (295) 338 338

2) Working for Can balance o Particcelais & Debit Amount in 1000' & Credit Amount in cooo! $ 1 92 Opening balance pod. Note payable A cand purchase Cash Revenue shares issued Salary and wages Exp Account Recenable Softcoare purchase Account Payable paid total Gross To toe closing balance 175 123 123 52 )

H P H Tools, Inc. In come statement for yea. Ended Dec 31, 2015 partieelars Amount in 000 $ 174 service Revenue supplies Consumed - Opening balance Purchase closing balance 13 to (12 ) (20) coages Expenses in salaries and Depreciation Amortization Interest (118) Income befor Tax Income Tax Net Income 36 (7) 29

H ciabilities Common stock Amount in 2000 $) & H Tool Inc Balance sheet As on Dec 31, 2015 Amough Assets Amoyot 88 Enceipmestit 67 Accumulated उ Depreciation land Softcore 32 Accumulated 114 18: 13 Amortizations 57 Retained Earnings Notes Payable current liabilities:- Accounts Payable salaries f cages payable Interest Payable Income Tax payable Current Assets !- cash Account Receivables Supplies 22 12 Total 169

Statement of Retained Earnings AS on Dec 31, 2015 Particulars Amaust in cooo'$) opening balance Alda Net in come Total Closing balance 29 38