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	$	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:

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

8. Post the closing entry from requirement 7 and prepare a post-closing trial balance.

Answer 1

Closing Entries

Account Titles	Debit	Credit
Service Revenue	$        178.00
Income Summary		$        178.00
Income Summary	$           145.00
Salaries and Wages Expense		$        106.00
Depreciation Expense		$            6.00
Amortization Expense		$            4.00
Income Tax Expense		$            8.00
Interest Expense		$            1.00
Supplies Expense		$          20.00
Income Summary	$             33.00
Retained Earnings		$             33.00

Post Closing Trial

Account Titles	Debit	Credit
Cash	$          74.00
Accounts Receivable	$          21.00
Supplies	$          10.00
Land	$            9.00
Equipment	$          69.00
Accumulated Depreciation		$          12.00
Software	$          34.00
Accumulated Amortization		$            8.00
Accounts Payable		$          10.00
Notes Payable (short-term)		$          12.00
Salaries and Wages Payable		$          12.00
Interest Payable		$            1.00
Income Tax Payable		$            8.00
Common Stock		$        113.00
Retained Earnings		$          41.00
Totals	$        217.00	$        217.00