Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on

Question:

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2010. The annual reporting period ends December 31. The trial balance on January 1, 2012, follows (the amounts are rounded to thousands of dollars to simplify):

Transactions during 2012 (summarized in thousands of dollars) follow:
a. Borrowed $12 cash on a six-month note payable dated March 1, 2012.
b. Purchased land for future building site, paid cash, $9.
c. Earned revenues for 2012, $160, including $40 on credit and $120 collected in cash.
d. Issued additional shares of stock for $3.
e. Recognized wages expense for 2012, $85 paid in cash.
f. Collected accounts receivable, $24.
g. Purchased other noncurrent assets, $10 cash.
h. Paid accounts payable, $13.
i. Purchased supplies on account for future use, $18.
j. Signed a $25 service contract to start February 1, 2013.
k. Declared and paid a cash dividend, $17.
Data for adjusting journal entries:
l. Supplies counted on December 31, 2012, $10.
m. Depreciation for the year on the equipment, $6.
n. Accrued interest of $1 on notes payable.
o. Wages earned not yet paid or recorded $12.
p. Income tax for the year was $8. It will be paid in 2013.
Required:
1. Set up T-accounts for the accounts on the trial balance and enter beginning balances.
2. Record journal entries for transactions (a) through (k), and post them to the T-accounts.
3. Prepare an unadjusted trial balance.
4. Record and post the adjusting journal entries (l) through (p) .
5. Prepare an adjusted trial balance.
6. Prepare an income statement, statement of retained earnings, and balance sheet.
7. Prepare and post the closing journal entries.
8. Prepare a post-closing trial balance.
9. How much net income did H & H Tool, Inc., generate during 2012? What was its net profit margin? Is the company financed primarily by liabilities or stockholders' equity? What is its current ratio?