Reference no: EM132869479
Question - Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):
Account Titles Debit Credit
Cash $2
Accounts Receivable 6
Supplies 13
Land 0
Equipment 51
Accumulated Depreciation $5
Software 24
Accumulated Amortization 4
Accounts Payable 4
Notes Payable (short-term) 0
Salaries and Wages Payable 0
Interest Payable 0
Income Tax Payable 0
Common Stock 74
Retained Earnings 9
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 $96 $96
Transactions and events during 2018 (summarized in thousands of dollars) follow:
-Borrowed $11 cash on March 1 using a short-term note.
-Purchased land on March 2 for future building site; paid cash, $8.
-Issued additional shares of common stock on April 3 for $33.
-Purchased software on July 4, $11 cash.
-Purchased supplies on account on October 5 for future use, $19.
-Paid accounts payable on November 6, $12.
-Signed a $20 service contract on November 7 to start February 1, 2019.
-Recorded revenues of $142 on December 8, including $31 on credit and $111 collected in cash.
-Recognized salaries and wages expense on December 9, $76 paid in cash.
-Collected accounts receivable on December 10, $15.Data for adjusting journal entries as of December 31:
-Unrecorded amortization for the year on software, $4.
-Supplies counted on December 31, 2018, $12.
-Depreciation for the year on the equipment, $5.
-Interest of $1 to accrue on notes payable.
-Salaries and wages earned but not yet paid or recorded, $11.
-Income tax for the year was $7. It will be paid in 2019.
Required -
a. Prepare an income statement.
b. Prepare the statement of retained earnings.
c. Prepare the balance sheet.