Question

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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		59
Accumulated Depreciation				$	7
Software		14
Accumulated Amortization					6
Accounts Payable					6
Notes Payable (short-term)					0
Salaries and Wages Payable					0
Interest Payable					0
Income Tax Payable					0
Common Stock					66
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 $25.
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 $158 on December 8, including $39 on credit and $119 collected in cash.
9. Recognized salaries and wages expense on December 9, $84 paid in cash.
10. Collected accounts receivable on December 10, $23.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $6.
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, $12.
16. Income tax for the year was $9. It will be paid in 2019.

4. Record the adjusting journal entries (k) through (p). (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.)

Journal entry worksheet

• Record the unrecorded amortization for the year on software, $6.

Note: Enter debits before credits.

	Transaction General Journal Debit Credit k.

Answer 1

Adjusting Entries:

Transaction	Account title and explanation	Debit	Credit
k	Amortization Expense	$6
	Accumulated amortization		$6
	[To record amortization expense]
l	Supplies expense [$11 beg+$17 pur.-$11 end.]	$17
	Supplies		$17
	[To record supplies expense]
m	Depreciation expense	$7
	Accumulated depreciation-Equipment		$7
	[To record depreciation expense]
n	Interest expense	$2
	Interest payable		$2
	[To record accrued interest expense]
o	Salaries and wages expense	$12
	Salaries and wages payable		$12
	[To record salaries and wages expense]
p	Income tax expense	$9
	Income tax payable		$9
	[To record accrued income tax expense]