The Trial Balance of Pacilio Security Services Inc as of Jan, 1 2018 had the fol
ID: 2462275 • Letter: T
Question
The Trial Balance of Pacilio Security Services Inc as of Jan, 1 2018 had the following normal balances. Cash $93,708 Petty Cash $100 Account Receivable $22,540 Allowance for doubtful accounts $1,334 Supplies $250 Prepaid rent $3,600 Merchandise Inventory (18 @ $285) $5,130 Land $4,000 Salaries payable $2,100 Common stock $50,000 Retained earnings $75,894 During 2018 Pacillo Security Services experienced the following transaction: 1. Paid the salaries payable from 2017. 2. Purchased equipment and a van for a lump sum of $ 36,000 cash on January 2, 2018. The equipment was appraised for $10,000 and the van was appraised for $30,000. 3. Paid $9,000 on May 1, 2018 for one year's Office rent in advance. 4.Purchased $300 of supplies on account. 5.Purchased 120 alarm systems at a cost of $280 each. Paid cash for the purchase. 6.After numerous attempts to collect from customers, wrote off $2,350 of uncollectible accounts receivable. 7.Sold 115 alarm systems for $580 each. All sales were on accounts. (Be sure to compute cost of goods sold using the FIFO cost flow method.) 8.Billed $86,000 of monitoring services for the year. Credit card sales amounted to $36,000, and the credit card company charged a 4 percent fee. The remaining $50,000 were sales on account. 9.Replenished the petty cash fund on June 30. The fund had $12 cash and receipts of $45 for yard mowing, $28 for office supplies expense , and $11 for miscellaneous exepenses. 10.Collected the amount due from the credit card company. 11. Paid installers and other employees a total of $52,000 cash for salaries. 12. Collected $115,500 of accounts receivable during the year. 13.Paid $12,500 of advertising expense during the year. 14.Paid $6,800 of utilities expense for the year. 15. Sold the land, which was purchased in 2011, for $12,000. 16. Paid the accounts payable. 17.Paid a dividend of $10,000 to the shareholders. ADJUSTMENTS 18.Determined that $180 of supplies were on hand at the end of the year. 19.Recognized the expired rent for both the old van and the office building for the year.The lease on the van was not renewed.Rent paid on March 1, 2017, for the van was $4,800. 20.Recognized uncollectible accounts expense fo the year using the allowance method. Pacilio estimates that 3 percent of sales on account will not be collected. 21.Recognized depreciation expense on the equipment and the van. The equipment has a five year life and a $2,000 salvage value. The van has a four-year life and a $6,000 salvage value.The company uses double-declining-balance for the van and straight-line for the equipment. 22.Accrued salaries at December 31,3018, were $1,500. REQUIRED: A. Record the above transaction in general journal form. b.Post the transaction to T-accounts. c.Prepare a trial balance. d.Prepare an income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows. e.Close the temporary accounts to retained earnings f.Post the closing entries to the T-accounts and prepare a post- closing trial balance.
Explanation / Answer
Journal entries
1. Salaries payable $2,100
Cash $2,100
2. Equipment $30,000
Van $10,000
Cash $36,000
Profit on purchase of asset $4,000
3. Prepaid rent $9,000
Cash $9,000
4. Supplies $300
Cash $300
5. Merchandise inventory $33,600 ( 120 * 280)
Cash $33,600
6. Allowance for doubt ful accounts $2,350
Accounts receivable $2,350
7. Accounts receivable $66,700
Sales revenue $66,700
Cost of goods sold $32,290
Merchandise inventory $32,290
8. Accounts receivable credit card $36,000
Accounts receivable $50,000
Sales revenue $86,000
9. Yard mowing expenses $45
Office supplies expense $28
Misc . expense $11
Cash over and short $4
Cash $88
10. Cash $34,560
Processing fees $1,440
Accounts receivable credit card $36,000
11. Salaries expense $52,000
Cash $52,000
12. Cash $115,500
Accounts receivable $115,500
13. Advertising expense $12,500
Cash $12,500
14. Utilities expense $6,800
Cash $6,800
15. Cash $12,000
Land $12,000
16. No entry
17. Dividend $10,000
Cash $10,000
Adjustments
18. Supplies expense $370
Supplies $370
19. Rent expense $9,600
Prepaid rent $9,600
20, Bad debt expense $3,017
Allowance for doubtful accounts $3,017
21. Depreciation expense $7,600
Accumulated depreciation equipment $1,600
Accumulated depreciation van $6,000
22. Salaries expense $1,500
Salaries payable $1,500
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