C$4-2$ From Recording Transactions $($Including Adjusting Journal Entries$)$ to Preparing Financial Statements and Closing Journal Entries $($Chapters $2,3,$ and $4)$

Brothers Harry and Herman Hausyerday began operations of their machine shop $($H & H Tool, Inc.$)$ on January $1,2020.$ The annual reporting period ends December $31.$ The trial balance on January $1,2021,$ follows $($the amounts are rounded to thousands of dollars to simplify$)$:

$\backslash$table$[[$Account Titles,Debit,Credit$],[$Cash$,$$$3,],[$Accounts Receivable,$5,],[$Supplies$,12,],[$Land$,0,],[$Equipment

LO $2-3,3-3,4-1,4-2,4-3,4-4,4-5,4-6$

Transactions and events during $2021($summarized in thousands of dollars$)$ follow:

a$.$ Borrowed $$12$ cash on March $1$ using a short$-$term note.

b$.$ Purchased land on March $2$ for future building site; paid cash, $$9.$

c$.$ Issued additional shares of common stock on April $3$ for $$23.$

d$.$ Purchased software on July $4,$ $$10$ cash.

e$.$ Purchased supplies on account on October $5$ for future use, $$18.$

f$.$ Paid accounts payable on November $6,$ $$13.$

g$.$ Signed a $$25$ service contract on November $7$ to start February $1,2022.$

h$.$ Recorded revenues of $$160$ on December $8,$ including $$40$ on credit and $$120$ collected

in cash.

i$.$ Recognized salaries and wages expense on December $9,$ $$85$ paid in cash.

j$.$ Collected accounts receivable on December $10,$ $$24.$

Data for adjusting journal entries as of December $31$:

k$.$ Unrecorded amortization for the year on software, $$5.$

l$.$ Supplies counted on December $31,2021,$ $$10.$

m$.$ Depreciation for the year on the equipment, $$6.$

n$.$ Interest of $$1$ to accrue on notes payable.

o$.$ Salaries and wages earned but not yet paid or recorded, $$12.$

p$.$ Income tax for the year was $$8.$ It will be paid in $2022.$

Required:

$1.$ Set up T$-$accounts for the accounts on the trial balance and enter beginning balances. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you.

$2.$ Record journal entries for transactions $($a$)$ through $($j$).$

$3.$ Post the journal entries from requirement $2$ to T$-$accounts and prepare an unadjusted trial balance. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you using your answers to requirement $2.$

$4.$ Record the adjusting journal entries $($k$)$ through $($p$).$

$5.$ Post the adjusting entries from requirement $4$ and prepare an adjusted trial balance. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you using your previous answers.

$6.$ Prepare an income statement, statement of retained earnings, and balance sheet.

$7.$ Prepare the closing journal entry.

$8.$ Post the closing entry from requirement $7$ and prepare a post$-$closing trial balance. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you using your previous answers.

$9.$ How much net income did H & H Tool, Inc., generate during $2021?$ What was its net profit margin? Is the company financed primarily by liabilities or stockholders$$ equity? What is its current ratio $($rounded to two decimal places$)?$