Question

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		50
Accumulated Depreciation				$	7
Software		23
Accumulated Amortization					5
Accounts Payable					6
Notes Payable (short-term)					0
Salaries and Wages Payable					0
Interest Payable					0
Income Tax Payable					0
Common Stock					67
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 $34.
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 $140 on December 8, including $30 on credit and $110 collected in cash.
9. Recognized salaries and wages expense on December 9, $75 paid in cash.
10. Collected accounts receivable on December 10, $14.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $5.
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, $13.
16. Income tax for the year was $9. It will be paid in 2019.

3. Prepare an unadjusted trial balance. (Enter your answers in thousands of dollars.)

Answer 1

Journal entries are prepared as under:

Date	Particulars	L.F	Amount ($)	Amount ($)
2018
1	Cash		13
	Note Payable			13
	(For cash borrowed against note payable)
2	Land		7
	Cash			7
	(For land purchased)
3	Cash		110
	Accounts Receivable		30
	Service Revenue			140
	(For services provided)
4	Cash		34
	CommonStock			34
	(For additional shares issued)
5	Salaries and wages expense		75
	Cash			75
	(For paid salaries and wages expense)
6	Cash		14
	Accounts Receivable			14
	(For collected AR)
7	Software		12
	Cash			12
	(For software purchased)
8	Accounts Payable		14
	Cash			14
9	Supplies		17
	Accounts Payable			17
	(For supplies purchased on account)
10	No entry
11	Amortization expense		5
	Accumulated amortization			5
	(For amortization expense recorded)
12	Supplies expense		17
	Supplies			17
	(For supplies expense recorded)
13	Depreciation		7
	Accumulated dep			7
	(For depreciation recorded)
14	Interest expense		2
	Interest payable			2
	(For interest recorded)
15	Salaries and wages expense		13
	Salaries and wages payable			13
	(For salaries and wages recorded)

T-accounts are prepared as under:

Cash
Particulars	Amount	Particulars	Amount
opening	4	2	7
1	13	5	75
3	110	7	12
4	34	8	14
6	14
	175		108
Closing	67
Accounts Receivable
Particulars	Amount	Particulars	Amount
opening	4	6	14
3	30
	34		14
Closing	20
Supplies
Particulars	Amount	Particulars	Amount
opening	11	12	17
9	17
	28
closing	28
Land
Particulars	Amount	Particulars	Amount
opening	0
2	7
closing	7
Equipment
Particulars	Amount	Particulars	Amount
opening	50
Accumulated dep
Particulars	Amount	Particulars	Amount
		opening	7
		13	7
Software
Particulars	Amount	Particulars	Amount
opening	23
7	12
	35
closing	35
Accumulated Amortization
Particulars	Amount	Particulars	Amount
		opening	5
		11	5
Accounts Payable
Particulars	Amount	Particulars	Amount
8	14	opening	6
		9	17
	14		23
		closing	9
Notes Payable (Short term)
Particulars	Amount	Particulars	Amount
		opening	0
		1	13
		closing	13
Salaries and Wages Payable
Particulars	Amount	Particulars	Amount
		opening	0
		15	13
Interest Payable
Particulars	Amount	Particulars	Amount
		opening	0
		14	2
Income tax payable
Particulars	Amount	Particulars	Amount
		opening	0
		Given	9
Common Stock
Particulars	Amount	Particulars	Amount
		opening	67
		4	34
		closing	101
Retained earning
Particulars	Amount	Particulars	Amount
		opening	7
		Net Profit	12
		closing	19
Service Revenue
Particulars	Amount	Particulars	Amount
		opening	0
		3	140
Salaries expense
Particulars	Amount	Particulars	Amount
opening	0
5	75
15	13
Depreciation
Particulars	Amount	Particulars	Amount
opening	0
13	7
Amortization
Particulars	Amount	Particulars	Amount
opening	0
11	5
Interest expense
Particulars	Amount	Particulars	Amount
opening	0
14	2
Income tax expense
Particulars	Amount	Particulars	Amount
opening	0
given	9
Supplies expense
Particulars	Amount	Particulars	Amount
opening	0
12	17

Unadjusted Trial Balance, Adjusted Trial balance,Income statement and balance sheet is prepared as under:

For the Year ended December 31, 2018
	Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance		Income Statement		Balance sheet
Account Title	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.
Cash	67				67				67
Accounts Receivable	20				20				20
Supplies	28			17	11				11
land	7				7				7
Equipment	50				50				50
Accumulated dep-Equipment		7		7		14				14
Software	35				35				35
Accumulated Amortization		5		5		10				10
Accounts Payable		9				9				9
Notes Payable (Short term)		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		101				101				101
Retained Earnings		7				7				19
Service Revenue		140				140		140
Salaries and Wages expenses	75		13		88		88
Depreciation expense	0		7		7		7
Amortization expense	0		5		5		5
Income tax expense	0		9		9		9
Interest expense	0		2		2		2
Supplies expense	0		17		17		17
Total	282	282
Net Profit			53	53	318	318	128	140	190	190
Total							12
							140	140