Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) onJanuary 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 | 2 | |
accounts recievable | 6 | |
supplies | 13 | |
land | 0 | |
equipment | 64 | |
accumulated depreciation | 5 | |
software | 18 | |
accumulated amortization | 4 | |
accounts payable | 4 | |
notes payable (short-term) | 0 | |
salaries and wages payable | 0 | |
interest payable | 0 | |
income tax payable | 0 | |
common stock | 81 | |
retained earning | 9 | |
service revenue | 0 | |
salaries and wages | 0 | |
depreciation expense | 0 | |
amortization expense | 0 | |
income tax | 0 | |
interest expense | 0 | |
supplies expense | 0 | |
Transactions during 2015 (summarized in thousands of dollars) follow:
1. Borrowed $11 cash on a six-month note payable dated March 1, 2015.
2. Purchased land for future building site; paid cash, $8.
3. Earned revenues for 2015, $168, including $44 on credit and $124 collected in cash.
4. Issued additional shares of stock for $4.
5. Recognized salaries and wages expense for 2015, $89 paid in cash.
6. Collected accounts receivable, $28.
7. Purchased software, $11 cash.
8. Paid accounts payable, $12.
9. Purchased supplies on account for future use, $19.
10. Signed a $20 service contract to start February 1, 2016.
Data for adjusting journal entries: |
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11. | Unrecorded amortization for the year on software, $4. | |
12. | Supplies counted on December 31, 2015, $12. | |
13. | Depreciation for the year on the equipment, $5. | |
14. | Accrued interest of $1 on notes payable. | |
15. | Salaries and wages earned but not yet paid or recorded, $13. | |
16. Income tax for the year was $7. It will be paid in
2016.
|
Adjusting entry :
No | Account and explanation | debit | credit |
11 | Amortization expenses | 4 | |
Accumlated amortization | 4 | ||
(To record amortization expense) | |||
12 | Supplies expense (13+19-12) | 20 | |
Supplies | 20 | ||
(To record supplies expense) | |||
13 | Depreciation expense | 5 | |
Accumlated depreciation | 5 | ||
(To record depreciation expense) | |||
14 | Interest expense | 1 | |
Interest payable | 1 | ||
(To record accured interest) | |||
15 | Salary and wages expense | 13 | |
Salary and wages payable | 13 | ||
(To record salary and wages expense) | |||
16 | Income tax expense | 7 | |
Income tax payable | 7 | ||
(To record income tax expense) | |||
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