C4-2 From Recording Transactions (Including Adjusting Journal Entries) to Preparing Financial Statements and Closing Journal Entries (Chapters 2, 3, and 4) [LO 2-3, LO 3-3, LO 4-1, LO 4-2, LO 4-3, LO 4-4, LO 4-5, LO 4-6]
[The following information applies to the questions displayed below.]
Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2013. The annual reporting period ends December 31. The trial balance on January 1, 2015, 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
52
Accumulated Depreciation
$
6
Software
22
Accumulated Amortization
8
Accounts Payable
5
Notes Payable (short-term)
0
Salaries and Wages Payable
0
Interest Payable
0
Income Tax Payable
0
Common Stock
67
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
$
94
$
94
Transactions during 2015 (summarized in thousands of dollars) follow:
1.
Borrowed $12 cash on a six-month note payable dated March 1, 2015.
2.
Purchased land for future building site; paid cash, $9.
3.
Earned revenues for 2015, $144, including $32 on credit and $112 collected in cash.
4.
Issued additional shares of stock for $3.
5.
Recognized salaries and wages expense for 2015, $77 paid in cash.
6.
Collected accounts receivable, $16.
7.
Purchased software, $10 cash.
8.
Paid accounts payable, $13.
9.
Purchased supplies on account for future use, $18.
10.
Signed a $25 service contract to start February 1, 2016.
Data for adjusting journal entries:
11.
Unrecorded amortization for the year on software, $8.
12.
Supplies counted on December 31, 2015, $10.
13.
Depreciation for the year on the equipment, $6.
14.
Accrued interest of $1 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 2016.