Question

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	$	3
Accounts Receivable		5
Supplies		12
Land		0
Equipment		69
Accumulated Depreciation				$	6
Software		24
Accumulated Amortization					4
Accounts Payable					5
Notes Payable (short-term)					0
Salaries and Wages Payable					0
Interest Payable					0
Income Tax Payable					0
Common Stock					90
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	$	113		$	113

Transactions during 2015 (summarized in thousands of dollars) follow:
1.	Borrowed $12 cash on a six-month note payable dated March 1, 2015.
2.	Purchased land for future building site; paid cash, $9.
3.	Earned revenues for 2015, $178, including $49 on credit and $129 collected in cash.
4.	Issued additional shares of stock for $3.
5.	Recognized salaries and wages expense for 2015, $94 paid in cash.
6.	Collected accounts receivable, $33.
7.	Purchased software, $10 cash.
8.	Paid accounts payable, $13.
9.	Purchased supplies on account for future use, $18.
10.	Signed a $25 service contract to start February 1, 2016.
Data for adjusting journal entries:
11.	Unrecorded amortization for the year on software, $4.
12.	Supplies counted on December 31, 2015, $10.
13.	Depreciation for the year on the equipment, $6.
14.	Accrued interest of $1 on notes payable.
15.	Salaries and wages earned but not yet paid or recorded, $12.
16.	Income tax for the year was $8. It will be paid in 2016.

3, 5 and 8.

Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions 1-10, adjusting entries 11-16, and closing entry. (Enter your answers in thousands of dollars.)

Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions 1-10, adjusting entries 11-16, and closing entry.

3.	Post the journal entries from requirement 2 to T-accounts and prepare an unadjusted trial balance. (Enter your answers in thousands of dollars.)

Answer 1

H & H Tool, Inc. (Amount in '000) Debit in $ Credit in $ Journal Enteries Date Particulars 1.3.2015 Cash a/c Dr. To Note Payable (Being Note Payable issued) 2.3.2015 Land a/c Dr,. To Cash (Being Land purchased in cash) 8.12.2015 Cash a/c Dr. Accounts Receivable a/c Dr. To service revenue (Being Revenue earned in cash and credit) 3.4.2015 Cash a/c Dr. To Common Stock (Being Common Stock issued for cash) 9.12.2015 Salaries and wages expense a/c Dr. To Cash (Being salaries and wages paid in cash) 10.12.2015 Cash a/c Dr. To Accounts Receivable (Being Cash received from debtors) 4.7.2015 Software a/c Dr. To Cash (Being Software purchased for cash) 10 6.11.2015 Accounts Payable a/c Dr. To Cash (Being Accounts Payable paid in cash) 1 5.10.2015 Supplies a/c Dr. To Accounts Payable (Being Supplies purchased on account)

Adjusting Enteries Date Particulars Debit in $ Credit in $ 31.12.2015 Amortization on software a/c Dr. To accumulated amortization |(Being amortization of software charged to Software) 31.12.2015 Supplies Expense a/c Dr. 20 To Supplies T (Being Supplies expense charged to Supplies) 20 Dr. 31.12.2015 Depreciation a/c To accumulated depreciation |(Being Depreciation on equipment charged to Equip.) 61 31.12.2015 Interest Expense a/c Dr. To Interest Payable |(Being Interest accrued on Note Payable) 31.12.2015 Salaries and wages expense a/c Dr. To Salaries and wages payable (Being Salary Expense accrued) Dr. 31.12.2015 Income tax expense a/c To Income Tax Payable (Being Income tax accrued) Closing Enteries Date Particulars Debit in $Credit in $ 31.12.2015 Income Summary a/c Dr. To Salaries and wages expense 106 To Depreciation Expense To Amortization Expense To Income tax expense To Interest Expense To Supplies Expense 20 (Being expense accounts closed 31.12.2015 Service Revenue a/c Dr. To Income Summary Being Revenue accounts closed 178 31.12.2015 Income Summary a/c Dr. To Retained Earnings (Being Income summary closed)

Adjusted Trial Balance For the period ending 31.12.2015 Unadjusted Adjustment Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Particulars Cash 20 20 20 13 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 Earning Service revenue Salaries and wages expense Depreciation Expense Amortization Expense Income tax expense Interest Expense Supplies Expense Totals 69 7 178 94 20 290 290 51 51 321 321 176 176

178 Statement of Income For the period ending 31.12.2015 Service revenue Less: Salaries and wages expense Depreciation Expense Amortization Expense Income tax expense Interest Expense Supplies Expense Net Income 145 33 Statement of Retained Earnings For the period ending 31.12.2015 1.1.2015 Net Income

Amounts in $ Amounts in $ Balance sheet As at 31.12.2015 Assets Amounts in $ Amounts in $ Liabilities Current Assets Current Liabilities Cash Accounts Payable Accounts Receivable Notes Payable (short term) Supplies 84 Salaries and wages payable Interest Payable Non Current Assets Income Tax Payable land Equipment Shareholders equity Accumulated deprecia 46 Common Stock Software Retained Earning Accumulated Amortiza -10 Total Assets 153 Total Liabilities & equity 44 109 14 153

Notes Payable (short term) Cash Bal. 12 12 Notes Payable (shor Service revenue Common Stock Accounts Receivable Cash 3 land 12 Salaries and wages ex 129 Software 3 Accounts Payable 33 Bal 180 Salaries and wages payable Salaries and wages e 12 Bal Bal. Service revenue Accounts Receivable 5 Cash 491 Bal 54 Interest Payable Interest Expense Income Tax Payable Income tax expense 8 Bal. Accounts Payable Supplies 12 Supplies Expense 18 Bal 30 Ral Common Stock Land Bal 90 Bal. Bal 93 Cash 3 Bal Equipment Retained Earning Bal 41 Income Summary Bal. Bal 33 41 41 69

Accumulated depreciation Bal 12 Depreciation Expense Bal. 12 Bal. Cash Software 24 10 Bal 34 Accumulated Amortization Bal. 8 Amortization Expense Bal Cash Accounts Payable 13 Bal. Supplies Bal 10