Brothers Steve and Herman Hargenrater began operations of their tool and die shop (H & H Tool. Inc.)

on January 1. 2002. The annual reporting period ends December 31. The trial balance on January 1.

2003. follows (the amounts are rounded to thousands of dollars to simplify):

Transactions during 2003 (summarized in thousands of dollars) follow:

Data for adjusting entries:
/.
m.
n.
o.
PSupplies counted on December 31, 2003, $14 (debit Remaining Expenses).
Depreciation for the year on the equipment, $6.
Interest accrued on notes payable (to be computed).
Wages earned since the December 24 payroll not yet paid, $12.
Income tax expense was $8, payable in 2004.
Required: 1. Set up T-accounts for the accounts on the trial balance and enter beginning balances. 2. Record transactions

(a) through (k) and post them to the T-accounts. 3. Record and post the adjusting entries (/) through (p). 4. Prepare an income statement (including earnings per share), statement of stockholders' equity, balance sheet, and statement of cash flows. 5. Record and post the closing entries. 6. Prepare a post-closing trial balance. 7. Compute the following ratios for 2003:

a. Financial leverage

b. Total asset turnover

c. Net profit margin Data for adjusting entries: 1. Supplies counted on December 31, 2003, $14 (debit Remaining Expenses). m. Depreciation for the year on the equipment. $6. n. Interest accrued on notes payable (to be computed). o. Wages earned since the December 24 payroll not yet paid, $12. p. Income tax expense was $8, payable in 2004. Required: 1. Set up T-accounts for the accounts on the trial balance and enter beginning balances. 2. Record transactions

(a) through (k) and post them to the T-accounts. 3. Record and post the adjusting entries (!) through (p). 4. Prepare an income statement (including earnings per share), statement of stockholders' equity, balance sheet, and statement of cash flows. 5. Record and post the closing entries. 6. Prepare a post-closing trial balance. 7. Compute the following ratios for 2003:

a. Financial leverage

b. Total asset turnover

c. Net profit margin.

Transcribed Image Text:

Account No. Account Titles 01 Cash 02 Accounts receivable 03 04 05 06 07 11 Supplies Land Equipment Accumulated depreciation (on equipment) Remaining assets (not detailed to simplify) Accounts payable 12 Notes payable 13 Wages payable 14 Interest payable 15 Income taxes payable 21 Contributed capital (65.000 shares) 31 Retained earnings 35 Service revenue 40 Depreciation expense 41 Income tax expense 42 43 Interest expense Remaining expenses (not detailed to simplify) Totals Debit Credit 352 12 60 10 5 88 65 1121 || 2 |