Brothers Mike and Tim Hargenrater began operations of their tool and die shop (H & H Tool, Inc.) on January 1, 2019. The annual reporting period ends December 31. The trial balance on January 1, 2020, follows:

H & H Tool, Inc. Trial Balance on January 1, 2020
	Debit				Credit
Cash		5,000
Accounts receivable		4,000
Supplies		27,000
Land
Equipment		94,000
Accumulated depreciation (on equipment)						13,000
Other noncurrent assets (not detailed to simplify)		8,000
Accounts payable
Wages payable
Interest payable
Dividends payable
Income taxes payable
Long-term notes payable
Common stock (8,000 shares, $.50 par value)						4,000
Additional paid-in capital						96,000
Retained earnings						25,000
Service revenue
Depreciation expense
Supplies expense
Wages expense
Interest expense
Income tax expense
Miscellaneous expenses (not detailed to simplify)
Totals		138,000				138,000

Transactions during 2020 follow:

1. Borrowed $24,000 cash on a 5-year, 10 percent note payable, dated March 1, 2020.
2. Purchased land for a future building site; paid cash, $19,000.
3. Earned $308,000 in revenues for 2020, including $65,000 on credit and the rest in cash.
4. Sold 4,000 additional shares of capital stock for cash at $1 market value per share on January 1, 2020.
5. Incurred $105,000 in wages expense and $41,000 in miscellaneous expenses for 2020, with $36,000 on credit and the rest paid in cash.
6. Collected accounts receivable, $40,000.
7. Purchased other assets, $14,000 cash.
8. Purchased supplies on account for future use, $39,000.
9. Paid accounts payable, $38,000.
10. Signed a three-year $45,000 service contract to start February 1, 2021.
11. Declared cash dividends on December 1, $20,000, which were paid by December 31.

Data for adjusting entries:

12. Supplies counted on December 31, 2020, $30,000.
13. Depreciation for the year on the equipment, $15,000.
14. Interest accrued on notes payable (to be computed).
15. Wages earned by employees since the December 24 payroll but not yet paid, $17,000.
16. Income tax expense, $14,000, payable in 2021.

COMP4-1 Part 1

Required:

1. Prepare journal entries for transactions (a) through (k).

• 1

  Record the borrowing of $24,000 cash on a five-year note payable dated March 1, 2020.

• 2

  Record the purchase of land for future building site, paid cash, $19,000.

• 3

  Record the entry for revenues for 2020, $308,000, including $65,000 on credit and the rest in cash.

• 4

  Record the issuance of 4,000 additional shares for cash at $1 market value per share on January 1, 2020.

• 5

  Record the incurred $105,000 in wages expense and $41,000 in miscellaneous expenses for 2020, with $36,000 on credit and the rest paid in cash.

• 6

  Record the collection of accounts receivable, $40,000.

• 7

  Record the purchase of other assets, $14,000 cash.

• 8

  Record the purchase of supplies on account for future use, $39,000.

• 9

  Record the payment of accounts payable, $38,000.

• 10

  Record the entry for three-year $45,000 service contract signed to start February 1, 2021.

• 11

  Record the declared cash dividends on December 1, $20,000.

• 12

  Record the payment of cash dividends on December 31, $20,000.