Answer:
H & H Tool, Inc.
a. Journal (Closing Entries):
Debit Revenue $000
Credit Retained Earnings $000
To close the revenue accounts to the retained earnings.
Debit Retained Earnings $000
Credit Expenses $000
To close the expense accounts to the retained earnings.
b. General Ledger Accounts:
Cash
Date Account Titles Debit Credit
Jan. 1 Balance $2
Accounts Receivable
Date Account Titles Debit Credit
Jan. 1 Balance $6
Supplies
Date Account Titles Debit Credit
Jan. 1 Balance $13
Equipment
Date Account Titles Debit Credit
Jan. 1 Balance $54
Accumulated Depreciation
Date Account Titles Debit Credit
Jan. 1 Balance $5
Software
Date Account Titles Debit Credit
Jan. 1 Balance $21
Accumulated Amortization
Date Account Titles Debit Credit
Jan. 1 Balance $6
Accounts Payable
Date Account Titles Debit Credit
Jan. 1 Balance $4
Common Stock
Date Account Titles Debit Credit
Jan. 1 Balance $72
Retained Earnings
Date Account Titles Debit Credit
Jan. 1 Balance $9
Explanation:
a) Trial Balance as of January 1, 2018:
Account Titles Debit Credit
Cash $2
Accounts Receivable 6
Supplies 13
Equipment 54
Accumulated Depreciation $5
Software 21
Accumulated Amortization 6
Accounts Payable 4
Common Stock 72
Retained Earnings 9
Totals 96 96
b) The revenue and expenses have zero balances. This means that they had been closed to the retained earnings account (Income Summary) before now. There is no logical need to repeat the process. However, a dummy has been entered for demonstration purpose.
