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	$	3
Accounts Receivable		5
Supplies		12
Land		0
Equipment		52
Accumulated Depreciation				$	6
Software		22
Accumulated Amortization					8
Accounts Payable					5
Notes Payable (short-term)					0
Salaries and Wages Payable					0
Interest Payable					0
Income Tax Payable					0
Common Stock					67
Retained Earnings					8
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	$	94		$	94

Transactions during 2015 (summarized in thousands of dollars) follow:
1.	Borrowed $12 cash on a six-month note payable dated March 1, 2015.
2.	Purchased land for future building site; paid cash, $9.
3.	Earned revenues for 2015, $144, including $32 on credit and $112 collected in cash.
4.	Issued additional shares of stock for $3.
5.	Recognized salaries and wages expense for 2015, $77 paid in cash.
6.	Collected accounts receivable, $16.
7.	Purchased software, $10 cash.
8.	Paid accounts payable, $13.
9.	Purchased supplies on account for future use, $18.
10.	Signed a $25 service contract to start February 1, 2016.
Data for adjusting journal entries:
11.	Unrecorded amortization for the year on software, $8.
12.	Supplies counted on December 31, 2015, $10.
13.	Depreciation for the year on the equipment, $6.
14.	Accrued interest of $1 on notes payable.
15.	Salaries and wages earned but not yet paid or recorded, $12.
16.	Income tax for the year was $8. It will be paid in 2016.

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.)

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.)

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

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.)

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

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.)

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.)

8.	Post the closing entry from requirement 7 and 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 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.)