Question
Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2010. The annual reporting period ends
Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2010. The annual reporting period ends December 31. The trial balance on January 1, 2012, 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 | 60 | |||||
Accumulated Depreciation | $ | 6 | ||||
Other Noncurrent Assets | 4 | |||||
Accounts Payable | 5 | |||||
Notes Payable (short-term) | 0 | |||||
Wages Payable | 0 | |||||
Interest Payable | 0 | |||||
Income Tax Payable | 0 | |||||
Contributed Capital | 65 | |||||
Retained Earnings | 8 | |||||
Dividends Declared | 0 | |||||
Service Revenue | 0 | |||||
Wages Expense | 0 | |||||
Depreciation Expense | 0 | |||||
Income Tax Expense | 0 | |||||
Interest Expense | 0 | |||||
Supplies Expense | 0 | |||||
Totals | $ | 84 | $ | 84 | ||
Transactions during 2012 (summarized in thousands of dollars) follow: | |
a. | Borrowed $12 cash on a six-month note payable dated March 1, 2012. |
b. | Purchased land for future building site, paid cash, $9. |
c. | Earned revenues for 2012, $160, including $40 on credit and $120 collected in cash. |
d. | Issued additional shares of stock for $3. |
e. | Recognized wages expense for 2012, $85 paid in cash. |
f. | Collected accounts receivable, $24. |
g. | Purchased other noncurrent assets, $10 cash. |
h. | Paid accounts payable, $13. |
i. | Purchased supplies on account for future use, $18. |
j. | Signed a $25 service contract to start February 1, 2013. |
k. | Declared and paid a cash dividend, $17. |
Data for adjusting journal entries: | |
l. | Supplies counted on December 31, 2012, $10. |
m. | Depreciation for the year on the equipment, $6. |
n. | Accrued interest of $1 on notes payable. |
o. | Wages earned not yet paid or recorded, $12. |
p. | Income tax for the year was $8. It will be paid in 2013. |
Required: | |
1. | Set up T-accounts for the accounts on the trial balance and enter beginning balances. (Enter your answers in thousands of dollars.) |
2. | Record journal entries for transactions (a) through (k). (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. | Prepare an unadjusted trial balance. (Enter your answers in thousands of dollars.) |
4. | Record and post the adjusting journal entries (l) through (p). (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.) |
5. | Prepare an adjusted trial balance. (Enter your answers in thousands of dollars.) |
6. | Prepare an income statement, statement of retained earnings, and balance sheet. (Enter your answers in thousands of dollars. Amounts to be deducted should be indicated by a minus sign.) |
7. | Prepare and post the closing journal entries. (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.) |
8. | Prepare a post-closing trial balance. (Enter your answers in thousands of dollars.) |
9-a. | How much net income did H & H Tool, Inc., generate during 2012? What was its net profit margin?(Enter "Net Income" in thousands of dollars. Round "Net Margin Profit" to 1 decimal place.) |
9-b. | Is the company financed primarily by liabilities or stockholders |
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