C4-2 From Recording Transactions (Including Adjusting Journal Entries) to Preparing Financial Statements and Closing Journal...
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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.)
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.)
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.)
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.)
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.)
Answer & Explanation
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