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 | $ | 4 | ||||
Accounts Receivable | 4 | |||||
Supplies | 11 | |||||
Land | 0 | |||||
Equipment | 56 | |||||
Accumulated Depreciation | $ | 7 | ||||
Software | 17 | |||||
Accumulated Amortization | 4 | |||||
Accounts Payable | 6 | |||||
Notes Payable (short-term) | 0 | |||||
Salaries and Wages Payable | 0 | |||||
Interest Payable | 0 | |||||
Income Tax Payable | 0 | |||||
Common Stock | 68 | |||||
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:
Borrowed $13 cash on March 1 using a short-term note.
Purchased land on March 2 for future building site; paid cash, $7.
Issued additional shares of common stock on April 3 for $28.
Purchased software on July 4, $12 cash.
Purchased supplies on account on October 5 for future use, $17.
Paid accounts payable on November 6, $14.
Signed a $30 service contract on November 7 to start February 1, 2019.
Recorded revenues of $152 on December 8, including $36 on credit and $116 collected in cash.
Recognized salaries and wages expense on December 9, $81 paid in cash.
Collected accounts receivable on December 10, $20.
Data for adjusting journal entries as of December 31:
Unrecorded amortization for the year on software, $4.
Supplies counted on December 31, 2018, $11.
Depreciation for the year on the equipment, $7.
Interest of $2 to accrue on notes payable.
Salaries and wages earned but not yet paid or recorded, $13.
Income tax for the year was $9. It will be paid in 2019.
Post the closing entry from requirement 7 and prepare a post-closing trial balance. (Enter your answers in thousands of dollars.)
Closing entry from requirement 7 post-closing trial balance is as prepared below:
Date | Particulars | L.F | Debit | Credit |
2018 | $ | $ | ||
Dec-31 | Service Revenue | 152 | ||
Income summary | 152 | |||
(For income closing balances recorded) | ||||
Dec-31 | Income summary | 133 | ||
Salaries and Wages Expense | 94 | |||
Supplies Expense | 17 | |||
Depreciation Expense | 7 | |||
Amortization Expense | 4 | |||
Interest Expense | 2 | |||
Income tax expense | 9 | |||
(For expenses closing balances recorded) | ||||
Dec-31 | Income summary | 19 | ||
Retained earnings | 19 | |||
(For income summary close to retained earnings) |
H&H Tool Inc. | ||
Post Closing Trial Balance | ||
December 31, 2018 | ||
(in thousands) | ||
Debit Balances | Credit balances | |
Cash | 67 | |
Account Receivable | 20 | |
Supplies | 11 | |
land | 7 | |
Equipment | 56 | |
Accumulated depreciation | 14 | |
Software | 29 | |
Accumulated depreciation | 8 | |
Accounts payable | 9 | |
Notes Payable | 13 | |
salaries and Wages payable | 13 | |
Interest Payable | 2 | |
Income tax payable | 9 | |
Common Stock | 96 | |
Retained earnings (7+19) | 26 | |
Total | 190 | 190 |
Working Notes:
H&H Tool Inc. | H&H Tool Inc. | ||||||||||||||||||||
Trial Balance | Trial Balance | ||||||||||||||||||||
January 1, 2018 | December 31, 2018 | ||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||
Debit Balances | Credit balances | Mar-01 | Mar-02 | Apr-03 | Jul-04 | Oct-05 | Nov-06 | Nov-07 | Dec-08 | Dec-09 | Dec-10 | Dec-31 | Dec-31 | Dec-31 | Dec-31 | Dec-31 | Dec-31 | Total | Debit | Credit | |
Cash | 4 | 13 | -7 | 28 | -12 | -14 | 116 | -81 | 20 | 63 | 67 | ||||||||||
Account Receivable | 4 | 36 | -20 | 16 | 20 | ||||||||||||||||
Supplies | 11 | 17 | -17 | 0 | 11 | ||||||||||||||||
land | 0 | 7 | 7 | 7 | |||||||||||||||||
Equipment | 56 | 0 | 56 | ||||||||||||||||||
Accumulated depreciation | 7 | 7 | 7 | 14 | |||||||||||||||||
Software | 17 | 12 | 12 | 29 | |||||||||||||||||
Accumulated depreciation | 4 | 4 | 4 | 8 | |||||||||||||||||
Accounts payable | 6 | 17 | -14 | 3 | 9 | ||||||||||||||||
Notes Payable | 0 | 13 | 13 | 13 | |||||||||||||||||
salaries and Wages payable | 0 | 13 | 13 | 13 | |||||||||||||||||
Interest Payable | 0 | 2 | 2 | 2 | |||||||||||||||||
Income tax payable | 0 | 9 | 9 | 9 | |||||||||||||||||
Common Stock | 68 | 28 | 28 | 96 | |||||||||||||||||
Retained earnings | 7 | 0 | 7 | ||||||||||||||||||
Service Revenue | 0 | 152 | 152 | 152 | |||||||||||||||||
Salaries and Wages Expense | 0 | 81 | 13 | 94 | 94 | ||||||||||||||||
Supplies Expense | 0 | 17 | 17 | 17 | |||||||||||||||||
Depreciation Expense | 0 | 7 | 7 | 7 | |||||||||||||||||
Amortization Expense | 0 | 4 | 4 | 4 | |||||||||||||||||
Interest Expense | 0 | 2 | 2 | 2 | |||||||||||||||||
Income tax expense | 0 | 9 | 9 | 9 | |||||||||||||||||
0 | 323 | 323 | |||||||||||||||||||
Total | 92 | 92 |