Recording Transactions (Including Adjusting and Closing Entries), Preparing Financial Statements, and Performing Ratio Analysis Brothers Herm and Steve Hargenrater began operations of their tool and die shop ( H \& H Tool) on January 1, 1987, in Meadville, PA. The annual reporting period ends December 31. Assume that the trial balance on January 1, 2023, was as follows: Transactions during 2023 follow. All dollars are in millions, except number of shares and per share amounts: a. Borrowed \$15 cash on a fiveyear, 8 percent note payable, dated March 1, 2023. b. Sold 4 million additional shares of common stock for cash at \$1 market value per share on January 1, 2023. c. Purchased land for a future building site; paid cash, \$13. d. Earned $215 in revenues for 2023 , including $52 on credit and the rest in cash. e. Incurred \$\$9 in wages expense and \$25 in miscellaneous expenses for 2023, with \$20 on credit and the rest paid in cash. f. Collected accounts receivable, \$34. g. Purchased other noncurrent assets, \$15 cash. 1. Purchased supplies on account for future use, \$27. 1. Paid accounts payable, \$26. f. Declared cash dividends on December 1, \$25. k. Signed a threeyear $33 service contract to start February 1, 2024. 1 Paid the dividends in (j) on December 31. Data for adjusting entries (amounts in millions): m. Supplies counted on December 31, 2023, \$18. n. Depreciation for the year on the equipment, $10. a. Interest accrued on notes payable (to be computed). p. Wages carned by employees since the December 24 payroll but not yet paid, $16. 4. Income tax expense, \$11, payable in 2024. Reyuinal: 1. Set up Taccounts for the accounts on the trial balance and enter beginning balances. 2. Prepare journal entries for transactions (a) through (l) and post them to the Taccounts. 3. Journalize and post the adjusting entries ( m ) through ( q ). 4. Prepare an income statement (including earnings per share rounded to two decimal places), statement of stockholders' equity, and balance sheet. 5. Identify the type of transaction for ( a ) through ( l ) for the statement of cash flows ( O for operating, 1 for imvesting, F for financing) and the diroction and amount of the effect. 6. Journalize and post the closing entry. 7. Compute the following ratios (rounded to two decimal places) for 2023 and explain what the results sugpest about the company: a. Current ratio b. Total asset turnover c. Net profit margin