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In: Accounting

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 $ 3
Accounts Receivable 5
Supplies 12
Land 0
Equipment 69
Accumulated Depreciation $ 6
Software 24
Accumulated Amortization 4
Accounts Payable 5
Notes Payable (short-term) 0
Salaries and Wages Payable 0
Interest Payable 0
Income Tax Payable 0
Common Stock 90
Retained Earnings 8
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 $ 113 $ 113

Transactions and events during 2018 (summarized in thousands of dollars) follow:

  1. Borrowed $12 cash on March 1 using a short-term note.
  2. Purchased land on March 2 for future building site; paid cash, $9.
  3. Issued additional shares of common stock on April 3 for $23.
  4. Purchased software on July 4, $10 cash.
  5. Purchased supplies on account on October 5 for future use, $18.
  6. Paid accounts payable on November 6, $13.
  7. Signed a $25 service contract on November 7 to start February 1, 2019.
  8. Recorded revenues of $178 on December 8, including $49 on credit and $129 collected in cash.
  9. Recognized salaries and wages expense on December 9, $94 paid in cash.
  10. Collected accounts receivable on December 10, $33.

Data for adjusting journal entries as of December 31:

  1. Unrecorded amortization for the year on software, $4.
  2. Supplies counted on December 31, 2018, $10.
  3. Depreciation for the year on the equipment, $6.
  4. Interest of $1 to accrue on notes payable.
  5. Salaries and wages earned but not yet paid or recorded, $12.
  6. Income tax for the year was $8. It will be paid in 2019.
  1. 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.)

Solutions

Expert Solution

Adjusting entries
S.no. Accounts title and explanations Debit $ Credit $
k Amortization expense 4
    Accumulated Amortization 4
(for amortization expense recognized)
l Supplies expense 20
     Supplies account (12+18+10) 20
(for supplies used)
m. Depreciation expense 6
    Accumulated Depreciation 6
(for depreciation charged)
n. Interest expense 1
     Interest payable 1
(for interest expense)
o Salaries and wages expense 12
     Salaries and wages payable 12
(for salaries accrued)
p. Income tax expense 8
     Income tax payable 8
(for income tax dues)

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