Question

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	$	4
Accounts Receivable		4
Supplies		11
Land		0
Equipment		65
Accumulated Depreciation				$	7
Software		21
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					80
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	$	105		$	105

Transactions during 2015 (summarized in thousands of dollars) follow:

1.

Borrowed $13 cash on a six-month note payable dated March 1, 2015.

2.

Purchased land for future building site; paid cash, $7.

3.

Earned revenues for 2015, $170, including $45 on credit and $125 collected in cash.

4.

Issued additional shares of stock for $2.

5.

Recognized salaries and wages expense for 2015, $90 paid in cash.

6.

Collected accounts receivable, $29.

7.

Purchased software, $12 cash.

8.

Paid accounts payable, $14.

9.

Purchased supplies on account for future use, $17.

10.

Signed a $30 service contract to start February 1, 2016.

Data for adjusting journal entries:

11.

Unrecorded amortization for the year on software, $5.

12.

Supplies counted on December 31, 2015, $11.

13.

Depreciation for the year on the equipment, $7.

14.

Accrued interest of $2 on notes payable.

15.

Salaries and wages earned but not yet paid or recorded, $11.

16.

Income tax for the year was $9. It will be paid in 2016.

Record journal entries for transactions (1) through (10). (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.)

3, 5 and 8.

Set up T-accounts for the accounts on the trial balance. Enter beginning balances and post the transactions 1-10, adjusting entries 11-16, and closing entry. (Enter your answers in thousands of dollars.)

Post the journal entries from requirement 2 to T-accounts and prepare an unadjusted trial balance. (Enter your answers in thousands of dollars.)

Record the adjusting journal entries (11) through (16). (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.)

Post the adjusting entries from requirement 4 and prepare an adjusted trial balance. (Enter your answers in thousands of dollars.)

Prepare an income statement.

Prepare a statement of retained earnings.

Prepare balance sheet. (Amounts to be deducted should be indicated by a minus sign.

Prepare the closing journal entry. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands Post the closing entry from requirement 7 and prepare a post-closing trial balance. (Enter your answers in thousands of dollars.) How much net income did H & H Tool, Inc., generate during 2015? What was its net profit margin? (Enter "Net Income" in thousands of dollars. Round "Net Profit Profit" to 2 decimal What is its current ratio? (Enter your answers in thousands of dollars.)

Answer 1