C4-2 From Recording Transactions (Including Adjusting JournalEntries) to Preparing Financial Statements and Closing JournalEntries...C4-2...

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Accounting

C4-2 From Recording Transactions (Including Adjusting JournalEntries) to Preparing Financial Statements and Closing JournalEntries (Chapters 2, 3, and 4) [LO 2-3, LO 3-3, LO 4-1, LO 4-2, LO4-3, LO 4-4, LO 4-5, LO 4-6]
[The following information applies to the questionsdisplayed below.]
Brothers Harry and HermanHausyerday began operations of their machine shop (H & H Tool,Inc.) on January 1, 2013. The annual reporting period ends December31. The trial balance on January 1, 2015, follows (the amounts arerounded to thousands of dollars to simplify):
  Account Titles Debit Credit
  Cash $ 4
  AccountsReceivable 4
  Supplies 11
  Land 0
  Equipment 50
  AccumulatedDepreciation $ 7
  Software 23
  AccumulatedAmortization 5
  AccountsPayable 6
  Notes Payable(short-term) 0
  Salaries and WagesPayable 0
  InterestPayable 0
  Income TaxPayable 0
  Common Stock 67
  RetainedEarnings 7
  Service Revenue 0
  Salaries and WagesExpense 0
  DepreciationExpense 0
  AmortizationExpense 0
  Income TaxExpense 0
  InterestExpense 0
  SuppliesExpense 0
     Totals $ 92 $ 92
Transactions during2015 (summarized in thousands of dollars) follow:
1. Borrowed $13 cash on a six-monthnote payable dated March 1, 2015.
2. Purchased land for futurebuilding site; paid cash, $7.
3. Earned revenues for 2015, $140,including $30 on credit and $110 collected in cash.
4. Issued additional shares ofstock for $2.
5. Recognized salaries and wagesexpense for 2015, $75 paid in cash.
6. Collected accounts receivable,$14.
7. Purchased software, $12cash.
8. Paid accounts payable, $14.
9. Purchased supplies on accountfor future use, $17.
10. Signed a $30 service contract tostart February 1, 2016.
Data for adjustingjournal entries:
11. Unrecorded amortization for theyear on software, $5.
12. Supplies counted on December 31,2015, $11.
13. Depreciation for the year on theequipment, $7.
14. Accrued interest of $2 on notespayable.
15. Salaries and wages earned butnot 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 FinancialStatements and Closing Journal Entries (Chapters 2, 3, and 4) [LO2-3, 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 youranswers in thousands of dollars.)

References
eBook & Resources
General JournalLearning Objective: 04-01Explain why adjustments are needed.Learning Objective: 04-04Prepare financial statements.
C4-2 Part 2Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.
Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow 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. Enterbeginning balances and post the transactions 1-10, adjustingentries 11-16, and closing entry. (Enter your answers inthousands of dollars.)
References
eBook & Resources
WorksheetLearning Objective: 04-01 Explain whyadjustments are needed.Learning Objective: 04-04 Prepare financialstatements.
C4-2 Part 3, 5, and 8Learning Objective: 04-02Prepare adjustments needed at the end of the period.LearningObjective: 04-05 Explain the closing process.
Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow 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 andprepare an unadjusted trial balance. (Enter your answers inthousands of dollars.)
References
eBook & Resources
WorksheetLearning Objective: 04-01 Explain whyadjustments are needed.Learning Objective: 04-04 Prepare financialstatements.
C4-2 Part 3Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.
Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow 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 youranswers in thousands of dollars.)

References
eBook & Resources
General JournalLearning Objective: 04-01Explain why adjustments are needed.Learning Objective: 04-04Prepare financial statements.
C4-2 Part 4Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.
Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow 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 anadjusted trial balance. (Enter your answers in thousands ofdollars.)
References
eBook & Resources
WorksheetLearning Objective: 04-01 Explain whyadjustments are needed.Learning Objective: 04-04 Prepare financialstatements.
C4-2 Part 5Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.
Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow adjustments affect financial results.
Check my work
6.
value:
1.11 points
Required information
C4-2 Part 6
6.a Prepare an incomestatement.

6.b Prepare a statement ofretained earnings.

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

References
eBook & Resources
Financial StatementsLearning Objective: 04-01Explain why adjustments are needed.Learning Objective: 04-04Prepare financial statements.
C4-2 Part 6Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.
Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow 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 isrequired for a transaction/event, select "No Journal EntryRequired" in the first account field. Enter your answers inthousands of dollars.)
References
eBook & Resources
General JournalLearning Objective: 04-01Explain why adjustments are needed.Learning Objective: 04-04Prepare financial statements.
C4-2 Part 7Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.
Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow 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 apost-closing trial balance. (Enter your answers inthousands of dollars.)
References
eBook & Resources
WorksheetLearning Objective: 04-01 Explain whyadjustments are needed.Learning Objective: 04-04 Prepare financialstatements.
C4-2 Part 8Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.
Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow 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 during2015? What was its net profit margin? (Enter "Net Income"in thousands of dollars. Round "Net Profit Profit" to 2 decimalplaces.)
9-b. Is the companyfinanced primarily by liabilities or stockholders’ equity?
Stockholders' Equity
Liabilities
9-c.
What is its current ratio? (Enter your answers inthousands of dollars.)

Answer & Explanation Solved by verified expert

3.9 Ratings (647 Votes)

1 In the books of H H Tool Inc Transaction Account Titles Debit Credit 1 Cash 13 Note Payable 13 2 Land 7 Cash 7 3 Cash 110 Accounts Receivable 30 Service Revenue 140 4 Cash 2 Common Stock 2 5 Salaries Expense 75 Cash 75 6 Cash 14 Accounts Receivable 14 7 Software 12 Cash 12 8 Accounts Payable 14 Cash 14 9 Supplies 17 Accounts Payable 17 10 No Journal Entry Required 0 0 3 H H Tool Inc Unadjusted Trial Balance December 31 2015 Account Titles Debit Credit 000 000 Cash 35 Accounts Receivable 20 Supplies 28 Land 7 Equipment 50 Accumulated Depreciation 7 Software 35 Accumulated See Answer

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In: AccountingC4-2 From Recording Transactions (Including Adjusting JournalEntries) to Preparing Financial Statements and Closing JournalEntries...C4-2 From Recording Transactions (Including Adjusting JournalEntries) to Preparing Financial Statements and Closing JournalEntries (Chapters 2, 3, and 4) [LO 2-3, LO 3-3, LO 4-1, LO 4-2, LO4-3, LO 4-4, LO 4-5, LO 4-6][The following information applies to the questionsdisplayed below.]Brothers Harry and HermanHausyerday began operations of their machine shop (H & H Tool,Inc.) on January 1, 2013. The annual reporting period ends December31. The trial balance on January 1, 2015, follows (the amounts arerounded to thousands of dollars to simplify): Account TitlesDebitCredit Cash$4 AccountsReceivable4 Supplies11 Land0 Equipment50 AccumulatedDepreciation$7 Software23 AccumulatedAmortization5 AccountsPayable6 Notes Payable(short-term)0 Salaries and WagesPayable0 InterestPayable0 Income TaxPayable0 Common Stock67 RetainedEarnings7 Service Revenue0 Salaries and WagesExpense0 DepreciationExpense0 AmortizationExpense0 Income TaxExpense0 InterestExpense0 SuppliesExpense0 Totals$92$92Transactions during2015 (summarized in thousands of dollars) follow:1.Borrowed $13 cash on a six-monthnote payable dated March 1, 2015.2.Purchased land for futurebuilding site; paid cash, $7.3.Earned revenues for 2015, $140,including $30 on credit and $110 collected in cash.4.Issued additional shares ofstock for $2.5.Recognized salaries and wagesexpense for 2015, $75 paid in cash.6.Collected accounts receivable,$14.7.Purchased software, $12cash.8.Paid accounts payable, $14.9.Purchased supplies on accountfor future use, $17.10.Signed a $30 service contract tostart February 1, 2016.Data for adjustingjournal entries:11.Unrecorded amortization for theyear on software, $5.12.Supplies counted on December 31,2015, $11.13.Depreciation for the year on theequipment, $7.14.Accrued interest of $2 on notespayable.15.Salaries and wages earned butnot yet paid or recorded, $13.16.Income tax for the year was $9.It will be paid in 2016.ReferencesSection BreakC4-2 From Recording Transactions(Including Adjusting Journal Entries) to Preparing FinancialStatements and Closing Journal Entries (Chapters 2, 3, and 4) [LO2-3, 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 pointsRequired informationC4-2 Part 2Required: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 youranswers in thousands of dollars.)ReferenceseBook & ResourcesGeneral JournalLearning Objective: 04-01Explain why adjustments are needed.Learning Objective: 04-04Prepare financial statements.C4-2 Part 2Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow adjustments affect financial results.Check my work2.value:1.11 pointsRequired informationC4-2 Part 3, 5, and 83, 5 and 8.Set up T-accounts for the accounts on the trial balance. Enterbeginning balances and post the transactions 1-10, adjustingentries 11-16, and closing entry. (Enter your answers inthousands of dollars.)ReferenceseBook & ResourcesWorksheetLearning Objective: 04-01 Explain whyadjustments are needed.Learning Objective: 04-04 Prepare financialstatements.C4-2 Part 3, 5, and 8Learning Objective: 04-02Prepare adjustments needed at the end of the period.LearningObjective: 04-05 Explain the closing process.Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow adjustments affect financial results.Check my work3.value:1.11 pointsRequired informationC4-2 Part 33.Post the journal entries from requirement 2 to T-accounts andprepare an unadjusted trial balance. (Enter your answers inthousands of dollars.)ReferenceseBook & ResourcesWorksheetLearning Objective: 04-01 Explain whyadjustments are needed.Learning Objective: 04-04 Prepare financialstatements.C4-2 Part 3Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow adjustments affect financial results.Check my work4.value:1.11 pointsRequired informationC4-2 Part 44.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 youranswers in thousands of dollars.)ReferenceseBook & ResourcesGeneral JournalLearning Objective: 04-01Explain why adjustments are needed.Learning Objective: 04-04Prepare financial statements.C4-2 Part 4Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow adjustments affect financial results.Check my work5.value:1.11 pointsRequired informationC4-2 Part 55.Post the adjusting entries from requirement 4 and prepare anadjusted trial balance. (Enter your answers in thousands ofdollars.)ReferenceseBook & ResourcesWorksheetLearning Objective: 04-01 Explain whyadjustments are needed.Learning Objective: 04-04 Prepare financialstatements.C4-2 Part 5Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow adjustments affect financial results.Check my work6.value:1.11 pointsRequired informationC4-2 Part 66.aPrepare an incomestatement. 6.bPrepare a statement ofretained earnings. 6.cPrepare balance sheet. (Amounts to be deducted should beindicated by a minus sign.) ReferenceseBook & ResourcesFinancial StatementsLearning Objective: 04-01Explain why adjustments are needed.Learning Objective: 04-04Prepare financial statements.C4-2 Part 6Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow adjustments affect financial results.Check my work7.value:1.11 pointsRequired informationC4-2 Part 77.Prepare the closing journal entry. (If no entry isrequired for a transaction/event, select "No Journal EntryRequired" in the first account field. Enter your answers inthousands of dollars.)ReferenceseBook & ResourcesGeneral JournalLearning Objective: 04-01Explain why adjustments are needed.Learning Objective: 04-04Prepare financial statements.C4-2 Part 7Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow adjustments affect financial results.Check my work8.value:1.11 pointsRequired informationC4-2 Part 88.Post the closing entry from requirement 7 and prepare apost-closing trial balance. (Enter your answers inthousands of dollars.)ReferenceseBook & ResourcesWorksheetLearning Objective: 04-01 Explain whyadjustments are needed.Learning Objective: 04-04 Prepare financialstatements.C4-2 Part 8Learning Objective: 04-02 Prepareadjustments needed at the end of the period.Learning Objective:04-05 Explain the closing process.Difficulty: 3 HardLearning Objective: 04-03Prepare an adjusted trial balance.Learning Objective: 04-06 Explainhow adjustments affect financial results.Check my work9.value:1.12 pointsRequired informationC4-2 Part 99-a.How much net income did H & H Tool, Inc., generate during2015? What was its net profit margin? (Enter "Net Income"in thousands of dollars. Round "Net Profit Profit" to 2 decimalplaces.)9-b.Is the companyfinanced primarily by liabilities or stockholders’ equity?Stockholders' EquityLiabilities9-c.What is its current ratio? (Enter your answers inthousands of dollars.)

Account Titles	Debit		Credit
Cash	$	4
AccountsReceivable		4
Supplies		11
Land		0
Equipment		50
AccumulatedDepreciation			$	7
Software		23
AccumulatedAmortization				5
AccountsPayable				6
Notes Payable(short-term)				0
Salaries and WagesPayable				0
InterestPayable				0
Income TaxPayable				0
Common Stock				67
RetainedEarnings				7
Service Revenue				0
Salaries and WagesExpense		0
DepreciationExpense		0
AmortizationExpense		0
Income TaxExpense		0
InterestExpense		0
SuppliesExpense		0

Totals	$	92	$	92

Transactions during2015 (summarized in thousands of dollars) follow:

1.	Borrowed $13 cash on a six-monthnote payable dated March 1, 2015.
2.	Purchased land for futurebuilding site; paid cash, $7.
3.	Earned revenues for 2015, $140,including $30 on credit and $110 collected in cash.
4.	Issued additional shares ofstock for $2.
5.	Recognized salaries and wagesexpense for 2015, $75 paid in cash.
6.	Collected accounts receivable,$14.
7.	Purchased software, $12cash.
8.	Paid accounts payable, $14.
9.	Purchased supplies on accountfor future use, $17.
10.	Signed a $30 service contract tostart February 1, 2016.

Data for adjustingjournal entries:

11.	Unrecorded amortization for theyear on software, $5.
12.	Supplies counted on December 31,2015, $11.
13.	Depreciation for the year on theequipment, $7.
14.	Accrued interest of $2 on notespayable.
15.	Salaries and wages earned butnot yet paid or recorded, $13.
16.	Income tax for the year was $9.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 youranswers in thousands of dollars.)

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

7.	Prepare the closing journal entry. (If no entry isrequired for a transaction/event, select "No Journal EntryRequired" in the first account field. Enter your answers inthousands of dollars.)

9-a.	How much net income did H & H Tool, Inc., generate during2015? What was its net profit margin? (Enter "Net Income"in thousands of dollars. Round "Net Profit Profit" to 2 decimalplaces.)

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