In: Accounting
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 $ 2 Accounts Receivable 6 Supplies 13 Land 0 Equipment 61 Accumulated Depreciation $ 5 Software 15 Accumulated Amortization 6 Accounts Payable 4 Notes Payable (short-term) 0 Salaries and Wages Payable 0 Interest Payable 0 Income Tax Payable 0 Common Stock 73 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 $ 97 $ 97 Transactions and events during 2018 (summarized in thousands of dollars) follow: Borrowed $11 cash on March 1 using a short-term note. Purchased land on March 2 for future building site; paid cash, $8. Issued additional shares of common stock on April 3 for $24. Purchased software on July 4, $11 cash. Purchased supplies on account on October 5 for future use, $19. Paid accounts payable on November 6, $12. Signed a $20 service contract on November 7 to start February 1, 2019. Recorded revenues of $162 on December 8, including $41 on credit and $121 collected in cash. Recognized salaries and wages expense on December 9, $86 paid in cash. Collected accounts receivable on December 10, $25. Data for adjusting journal entries as of December 31: Unrecorded amortization for the year on software, $6. Supplies counted on December 31, 2018, $12. Depreciation for the year on the equipment, $5. Interest of $1 to accrue on notes payable. Salaries and wages earned but not yet paid or recorded, $13. Income tax for the year was $7. It will be paid in 2019. 1, 3, 5 and 8. Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions (a)-(j), adjusting entries (k)-(p), and closing entry
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Date | Account | Debit | Credit | |
Mar 1 | Cash | $ 11 | ||
Note Payable (Short term) | $ 11 | |||
Mar 2 | Land | $ 8 | ||
Cash | $ 8 | |||
Apr 3 | Cash | $ 24 | ||
Common Stock | $ 24 | |||
Jul 4 | Software | $ 11 | ||
Cash | $ 11 | |||
Oct 5 | Supplies | $ 19 | ||
Accounts Payable | $ 19 | |||
Nov 6 | Accounts Payable | $ 12 | ||
Cash | $ 12 | |||
Dec 8 | Accounts Receivable | $ 41 | ||
Cash | $ 121 | |||
Service Revenue | $ 162 | |||
Dec 9 | Salaries and Wages Expense | $ 86 | ||
Cash | $ 86 | |||
Dec 10 | Cash | $ 25 | ||
Accounts Receivable | $ 25 | |||
Adjusting Entries: | ||||
Dec 31 | Amortization Expense | $ 6 | ||
Accumulated Amortization | $ 6 | |||
Dec 31 | Supplies Expense | $ 20 | 19+13-12 | |
Supplies | $ 20 | |||
Dec 31 | Depreciation Expense | $ 5 | ||
Accumulated Depreciation | $ 5 | |||
Dec 31 | Interest Expense | $ 1 | ||
Interest Payable | $ 1 | |||
Dec 31 | Salaries and Wages Expense | $ 13 | ||
Salaries and Wages Payable | $ 13 | |||
Dec 31 | Income Tax Expense | $ 7 | ||
Income Tax Payable | $ 7 | |||
Closing Entries: | ||||
Dec 31 | Service Revenue | $ 162 | ||
Income Summary | $ 162 | |||
Dec 31 | Income Summary | $ 138 | ||
Salaries and Wages Expense | $ 99 | |||
Depreciation Expense | $ 5 | |||
Amortization Expense | $ 6 | |||
Income Tax Expense | $ 7 | |||
Interest Expense | $ 1 | |||
Supplies Expense | $ 20 | |||
Dec 31 | Income Summary | $ 24 | ||
Retained Earning | $ 24 |
Beginning | Unadjusted | Adjustments | Adjusted Trial | |||||
Account Titles | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
Cash | $ 2 | $ 64 | $ 66 | |||||
Accounts Receivable | $ 6 | $ 16 | $ 22 | |||||
Supplies | $ 13 | $ 19 | $ 20 | $ 12 | ||||
Land | $ - | $ 8 | $ 8 | |||||
Equipment | $ 61 | $ 61 | ||||||
Accumulated Depreciation | $ 5 | $ 5 | $ 10 | |||||
Software | $ 15 | $ 11 | $ 26 | |||||
Accumulated Amortization | $ 6 | $ 6 | $ 12 | |||||
Accounts Payable | $ 4 | $ 7 | $ 11 | |||||
Notes Payable (short-term) | $ - | $ 11 | $ 11 | |||||
Salaries and Wages Payable | $ - | $ 13 | $ 13 | |||||
Interest Payable | $ - | $ 1 | $ 1 | |||||
Income Tax Payable | $ - | $ 7 | $ 7 | |||||
Common Stock | $ 73 | $ 24 | $ 97 | |||||
Retained Earnings | $ 9 | $ 9 | ||||||
Service Revenue | $ - | $ 162 | $ 162 | |||||
Salaries and Wages Expense | $ - | $ 86 | $ 13 | $ 99 | ||||
Depreciation Expense | $ - | $ 5 | $ 5 | |||||
Amortization Expense | $ - | $ 6 | $ 6 | |||||
Income Tax Expense | $ - | $ 7 | $ 7 | |||||
Interest Expense | $ - | $ 1 | $ 1 | |||||
Supplies Expense | $ - | $ 20 | $ 20 | |||||
Totals | $ 97 | $ 97 | $ 204 | $ 204 | $ 52 | $ 52 | $ 333 | $ 333 |
Cash | Accounts Receivable | |||||||
Debit | Credit | Debit | Credit | |||||
Beginning | $ 2 | Mar 2 | $ 8 | Beginning | $ 6 | Dec 10 | $ 25 | |
Mar 1 | $ 11 | Jul 4 | $ 11 | Dec 8 | $ 41 | |||
Apr 3 | $ 24 | Nov 6 | $ 12 | |||||
Dec 8 | $ 121 | Dec 9 | $ 86 | |||||
Dec 10 | $ 25 | Ending | $ 22 | |||||
Ending | $ 66 | |||||||
Land | ||||||||
Debit | Credit | |||||||
Mar 2 | $ 8 | |||||||
Supplies | Ending | $ 8 | ||||||
Debit | Credit | |||||||
Beginning | $ 13 | Dec 31 | $ 20 | Acc Dep | ||||
Oct 5 | $ 19 | Debit | Credit | |||||
Beginning | $ 5 | |||||||
Ending | $ 12 | Dec 31 | $ 5 | |||||
Ending | $ 10 | |||||||
Equipment | Acc Amortization | |||||||
Debit | Credit | Debit | Credit | |||||
Beginning | $ 61 | Beginning | $ 6 | |||||
Dec 31 | $ 6 | |||||||
Ending | $ 61 | Ending | $ 12 | |||||
Accounts Payable | ||||||||
Software | Debit | Credit | ||||||
Debit | Credit | Nov 6 | $ 12 | Beginning | $ 4 | |||
Beginning | $ 15 | Oct 5 | $ 19 | |||||
Jul 4 | $ 11 | |||||||
Ending | $ 11 | |||||||
Ending | $ 26 | |||||||
Note Payable | ||||||||
Debit | Credit | |||||||
Salaries and Wages Payable | Mar 1 | $ 11 | ||||||
Debit | Credit | |||||||
Dec 31 | $ 13 | |||||||
Ending | $ 11 | |||||||
Ending | $ 13 | Interest Payable | ||||||
Debit | Credit | |||||||
Income Tax Payable | Dec 31 | $ 1 | ||||||
Debit | Credit | |||||||
Dec 31 | $ 7 | |||||||
Ending | $ 1 | |||||||
Ending | $ 7 | Common Stock | ||||||
Debit | Credit | |||||||
Retained Earning | Beginning | $ 73 | ||||||
Debit | Credit | Apr 3 | $ 24 | |||||
Beginning | $ 9 | |||||||
Net Income | $ 13 | Ending | $ 97 | |||||
Ending | $ 22 | Service Revenue | ||||||
Debit | Credit | |||||||
Salaries and Wages Expense | Dec 8 | $ 162 | ||||||
Debit | Credit | |||||||
Dec 9 | $ 86 | |||||||
Dec 31 | $ 13 | |||||||
Income Tax Expense | ||||||||
Debit | Credit | |||||||
Depreciation Expense | Dec 31 | $ 7 | ||||||
Debit | Credit | |||||||
Dec 31 | $ 5 | |||||||
Interest Expense | ||||||||
Debit | Credit | |||||||
Amortization Expense | Dec 31 | $ 1 | ||||||
Debit | Credit | |||||||
Dec 31 | $ 6 | |||||||
Supplies Expense | ||||||||
Debit | Credit | |||||||
Dec 31 | $ 20 | |||||||