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Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.)...

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.)

Solutions

Expert Solution

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

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