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 $ 2 Accounts Receivable 6 Supplies 13 Land 0 Equipment 70 Accumulated Depreciation $ 5 Software 15 Accumulated Amortization 5 Accounts Payable 4 Notes Payable (short-term) 0 Salaries and Wages Payable 0 Interest Payable 0 Income Tax Payable 0 Common Stock 83 Retained Earnings 9 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 $ 106 $ 106

Transactions and events during 2018 (summarized in thousands of dollars) follow: Borrowed $11 cash on March 1 using a short-term note. Purchased land on March 2 for future building site; paid cash, $8. Issued additional shares of common stock on April 3 for $24. Purchased software on July 4, $11 cash. Purchased supplies on account on October 5 for future use, $19. Paid accounts payable on November 6, $12. Signed a $20 service contract on November 7 to start February 1, 2019. Recorded revenues of $180 on December 8, including $50 on credit and $130 collected in cash. Recognized salaries and wages expense on December 9, $95 paid in cash. Collected accounts receivable on December 10, $34. Data for adjusting journal entries as of December 31: Unrecorded amortization for the year on software, $5. Supplies counted on December 31, 2018, $12. Depreciation for the year on the equipment, $5. Interest of $1 to accrue on notes payable. Salaries and wages earned but not yet paid or recorded, $13. Income tax for the year was $7. It will be paid in 2019.

1, 3, 5 and 8. Set up T-accounts for the accounts on the trial balance.

Enter beginning balances and post the transactions (a)-(j), adjusting entries (k)-(p), and closing entry. (Enter your answers in thousands of dollars.)

Answer 1

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Date	Account	Debit	Credit
Mar 1	Cash	$         11
	Note Payable (Short term)		$         11
Mar 2	Land	$           8
	Cash		$           8
Apr 3	Cash	$         24
	Common Stock		$         24
Jul 4	Software	$         11
	Cash		$         11
Oct 5	Supplies	$         19
	Accounts Payable		$         19
Nov 6	Accounts Payable	$         12
	Cash		$         12
Dec 8	Accounts Receivable	$         50
	Cash	$       130
	Service Revenue		$       180
Dec 9	Salaries and Wages Expense	$         95
	Cash		$         95
Dec 10	Cash	$         34
	Accounts Receivable		$         34
Adjusting Entries:
Dec 31	Amortization Expense	$           5
	Accumulated Amortization		$           5
Dec 31	Supplies Expense	$         20		19+13-12
	Supplies		$         20
Dec 31	Depreciation Expense	$           5
	Accumulated Depreciation		$           5
Dec 31	Interest Expense	$           1
	Interest Payable		$           1
Dec 31	Salaries and Wages Expense	$         13
	Salaries and Wages Payable		$         13
Dec 31	Income Tax Expense	$           7
	Income Tax Payable		$           7

	Beginning		Unadjusted		Adjustments		Adjusted Trial
Account Titles	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$           2		$         73				$         75
Accounts Receivable	$           6		$         16				$         22
Supplies	$         13		$         19			$         20	$         12
Land	$          -		$           8				$           8
Equipment	$         70						$         70
Accumulated Depreciation		$           5				$           5		$         10
Software	$         15		$         11				$         26
Accumulated Amortization		$           5				$           5		$         10
Accounts Payable		$           4		$           7				$         11
Notes Payable (short-term)		$          -		$         11				$         11
Salaries and Wages Payable		$          -				$         13		$         13
Interest Payable		$          -				$           1		$           1
Income Tax Payable		$          -				$           7		$           7
Common Stock		$         83		$         24				$       107
Retained Earnings		$           9						$           9
Service Revenue	$          -			$       180				$       180
Salaries and Wages Expense	$          -		$         95		$         13		$       108
Depreciation Expense	$          -				$           5		$           5
Amortization Expense	$          -				$           5		$           5
Income Tax Expense	$          -				$           7		$           7
Interest Expense	$          -				$           1		$           1
Supplies Expense	$          -				$         20		$         20
Totals	$       106	$       106	$       222	$       222	$         51	$         51	$       359	$       359

Cash					Accounts Receivable
Debit		Credit			Debit		Credit
Beginning	$           2	Mar 2	$           8		Beginning	$           6	Dec 10	$         34
Mar 1	$         11	Jul 4	$         11		Dec 8	$         50
Apr 3	$         24	Nov 6	$         12
Dec 8	$       130	Dec 9	$         95
Dec 10	$         34				Ending	$         22
Ending	$         75
					Land
					Debit		Credit
					Mar 2	$           8
Supplies					Ending	$           8
Debit		Credit
Beginning	$         13	Dec 31	$         20		Acc Dep
Oct 5	$         19				Debit		Credit
							Beginning	$           5
Ending	$         12						Dec 31	$           5
							Ending	$         10
Equipment					Acc Amortization
Debit		Credit			Debit		Credit
Beginning	$         70						Beginning	$           5
							Dec 31	$           5
Ending	$         70						Ending	$         10
					Accounts Payable
Software					Debit		Credit
Debit		Credit			Nov 6	$         12	Beginning	$           4
Beginning	$         15						Oct 5	$         19
Jul 4	$         11
							Ending	$         11
Ending	$         26
					Note Payable
					Debit		Credit
Salaries and Wages Payable							Mar 1	$         11
Debit		Credit
		Dec 31	$         13
							Ending	$         11
		Ending	$         13		Interest Payable
					Debit		Credit
Income Tax Payable							Dec 31	$           1
Debit		Credit
		Dec 31	$           7
							Ending	$           1
		Ending	$           7		Common Stock
					Debit		Credit
Retained Earning							Beginning	$         83
Debit		Credit					Apr 3	$         24
		Beginning	$           9
		Net Income	$         13				Ending	$       107
		Ending	$         22		Service Revenue
					Debit		Credit
Salaries and Wages Expense							Dec 8	$       180
Debit		Credit
Dec 9	$         95
Dec 31	$         13
					Income Tax Expense
					Debit		Credit
Depreciation Expense					Dec 31	$           7
Debit		Credit
Dec 31	$           5
					Interest Expense
					Debit		Credit
Amortization Expense					Dec 31	$           1
Debit		Credit
Dec 31	$           5
					Supplies Expense
					Debit		Credit
					Dec 31	$         20

Closing Entries:

Closing Entries:
Dec 31	Service Revenue	$       180
	Income Summary		$       180
Dec 31	Income Summary	$       146
	Salaries and Wages Expense		$       108
	Depreciation Expense		$           5
	Amortization Expense		$           5
	Income Tax Expense		$           7
	Interest Expense		$           1
	Supplies Expense		$         20
Dec 31	Income Summary	$         34
	Retained Earning		$         34