Reference no: EM132967742
Question - Recording transactions (Including adjusting and closing entries), preparing a set of financial statements and performing ratio analysis. Brothers Mike and Tim Hargen began operations of their tool and die shop (H&H Tool, Inc.) on January 1, 2013. The annual reporting period ends December 31. The trial balance on January 1, 2014 follows:
Transactions during 2014 follow:
A. Borrowed $12,000 cash on a 5-year, 10 percent note payable, dated March 1, 2014
B. Purchased land for a future building site; paid cash, $12,000
C. Earned $208,000 in revenues for 2014, including $52,000 on credit and the rest in cash
D. Sold 4,000 additional shares of capital stock for cash at $1 market value per share on January 1, 2014
E. Incurred $111,000 in remaining expenses for 2014, including $20,000 on credit and the rest paid in cash
F. Collected accounts receivable, $34,000
G. Purchased other assets, $13,000 cash
H. Paid accounts payable, $19,000
I. Purchased supplies on account for future use, $23,000
J. Signed a three-year $33,000 service contract to start February 1, 2015
K. Declared and paid cash dividends, $22,000Data for the adjusting entries:
L. Supplies counted on December 31, 2014, $18,000
M. Depreciation for the year on the equipment, $8,000
N. Interest accrued on notes payable (to be computed)
O. Wages earned by employees since the December 24 payroll but not yet paid, $16,000
P. Income tax expense, $10,000, payable in 2015
Required - Journalize and post the closing entries.