C4-2 From Recording Transactions (Including Adjusting Journal Entries) to Preparing Financial Statements and Closing Journal Entries (Chapters 2, 3, and 4) [LO 2-3, LO 3-3, LO 4-1, LO 4-2, LO 4-3, LO 4-4, LO 4-5, LO 4-6]

[The following information applies to the questions displayed below.]

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		50
Accumulated Depreciation				$	7
Software		23
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					67
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	$	92		$	92

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, $140, including $30 on credit and $110 collected in cash.
4.	Issued additional shares of stock for $2.
5.	Recognized salaries and wages expense for 2015, $75 paid in cash.
6.	Collected accounts receivable, $14.
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, $13.
16.	Income tax for the year was $9. It will be paid in 2016.

References

Section BreakC4-2 From Recording Transactions (Including Adjusting Journal Entries) to Preparing Financial Statements and Closing Journal Entries (Chapters 2, 3, and 4) [LO 2-3, LO 3-3, LO 4-1, LO 4-2, LO 4-3, LO 4-4, LO 4-5, LO 4-6]

1.

value: 1.11 points

Required information

C4-2 Part 2

Required:
2.	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.)

References

eBook & Resources

General JournalLearning Objective: 04-01 Explain why adjustments are needed.Learning Objective: 04-04 Prepare financial statements.

C4-2 Part 2Learning Objective: 04-02 Prepare adjustments needed at the end of the period.Learning Objective: 04-05 Explain the closing process.

Difficulty: 3 HardLearning Objective: 04-03 Prepare an adjusted trial balance.Learning Objective: 04-06 Explain how adjustments affect financial results.

Check my work

2.

value: 1.11 points

Required information

C4-2 Part 3, 5, and 8

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.)

References

eBook & Resources

WorksheetLearning Objective: 04-01 Explain why adjustments are needed.Learning Objective: 04-04 Prepare financial statements.

C4-2 Part 3, 5, and 8Learning Objective: 04-02 Prepare adjustments needed at the end of the period.Learning Objective: 04-05 Explain the closing process.

Difficulty: 3 HardLearning Objective: 04-03 Prepare an adjusted trial balance.Learning Objective: 04-06 Explain how adjustments affect financial results.

Check my work

3.

value: 1.11 points

Required information

C4-2 Part 3

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

References

eBook & Resources

WorksheetLearning Objective: 04-01 Explain why adjustments are needed.Learning Objective: 04-04 Prepare financial statements.

C4-2 Part 3Learning Objective: 04-02 Prepare adjustments needed at the end of the period.Learning Objective: 04-05 Explain the closing process.

Difficulty: 3 HardLearning Objective: 04-03 Prepare an adjusted trial balance.Learning Objective: 04-06 Explain how adjustments affect financial results.

Check my work

4.

value: 1.11 points

Required information

C4-2 Part 4

4.	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.)

References

eBook & Resources

General JournalLearning Objective: 04-01 Explain why adjustments are needed.Learning Objective: 04-04 Prepare financial statements.

C4-2 Part 4Learning Objective: 04-02 Prepare adjustments needed at the end of the period.Learning Objective: 04-05 Explain the closing process.

Difficulty: 3 HardLearning Objective: 04-03 Prepare an adjusted trial balance.Learning Objective: 04-06 Explain how adjustments affect financial results.

Check my work

5.

value: 1.11 points

Required information

C4-2 Part 5

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

References

eBook & Resources

WorksheetLearning Objective: 04-01 Explain why adjustments are needed.Learning Objective: 04-04 Prepare financial statements.

C4-2 Part 5Learning Objective: 04-02 Prepare adjustments needed at the end of the period.Learning Objective: 04-05 Explain the closing process.

Difficulty: 3 HardLearning Objective: 04-03 Prepare an adjusted trial balance.Learning Objective: 04-06 Explain how adjustments affect financial results.

Check my work

6.

value: 1.11 points

Required information

C4-2 Part 6

6.a	Prepare an income statement.

6.b	Prepare a statement of retained earnings.

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

References

eBook & Resources

Financial StatementsLearning Objective: 04-01 Explain why adjustments are needed.Learning Objective: 04-04 Prepare financial statements.

C4-2 Part 6Learning Objective: 04-02 Prepare adjustments needed at the end of the period.Learning Objective: 04-05 Explain the closing process.

Difficulty: 3 HardLearning Objective: 04-03 Prepare an adjusted trial balance.Learning Objective: 04-06 Explain how adjustments affect financial results.

Check my work

7.

value: 1.11 points

Required information

C4-2 Part 7

7.	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 of dollars.)

References

eBook & Resources

General JournalLearning Objective: 04-01 Explain why adjustments are needed.Learning Objective: 04-04 Prepare financial statements.

C4-2 Part 7Learning Objective: 04-02 Prepare adjustments needed at the end of the period.Learning Objective: 04-05 Explain the closing process.

Difficulty: 3 HardLearning Objective: 04-03 Prepare an adjusted trial balance.Learning Objective: 04-06 Explain how adjustments affect financial results.

Check my work

8.

value: 1.11 points

Required information

C4-2 Part 8

8.	Post the closing entry from requirement 7 and prepare a post-closing trial balance. (Enter your answers in thousands of dollars.)

References

eBook & Resources

WorksheetLearning Objective: 04-01 Explain why adjustments are needed.Learning Objective: 04-04 Prepare financial statements.

C4-2 Part 8Learning Objective: 04-02 Prepare adjustments needed at the end of the period.Learning Objective: 04-05 Explain the closing process.

Difficulty: 3 HardLearning Objective: 04-03 Prepare an adjusted trial balance.Learning Objective: 04-06 Explain how adjustments affect financial results.

Check my work

9.

value: 1.12 points

Required information

C4-2 Part 9

9-a.	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 places.)

9-b.

Is the company financed primarily by liabilities or stockholders equity?

	Stockholders' Equity
	Liabilities

9-c.	What is its current ratio? (Enter your answers in thousands of dollars.)