Question

The trial balance of Pacilio Security Services, Inc. as of January 1. Year 3, had the VE PROBLEM normal balances: Cash Accounts Receivable Supplies Prepaid Rent Land Accounts Payable Unearned Revenue Salaries Payable Notes Payable Common Stock Retained Earnings $8.900 1,500 65 800 4,000 1.050 200 1,200 2.000 8,000 2,815 During Year 3, Pacilio Security Services experienced the following transactions: 1. Paid the salaries payable from Year 2. 2. Paid the balance of $2,000 on the debt owed to the Small Business Government Agency. The le is interest-free. 3. Performed $32,000 of security services for numerous local events during the year, $21,000 w2ce account and $11,000 was for cash. 4. On May 1, paid $3,000 for 12 months' rent in advance. 5. Purchased supplies on account for $700. 6. Paid salaries expense for the year of $9,000. 7. Incurred other operating expenses on account, $4,200. 8. On October 1, Year 3, a customer paid $1,200 for services to be provided over the next 12 months 9. Collected $19,000 of accounts receivable during the year. 10. Paid $5.950 on accounts payable. 11. Paid $1,800 of advertising expenses for the year. 12. Paid a cash dividend to the shareholders of $4,650. 13. The market value of the land was determined to be $5,500 at December 31, Year 3. Adjustments 14. There was $120 of supplies on hand at the end of the year. 15. Recognized the expired rent. 16. Recognized the earned revenue from Year 2 and transaction no. 8. 17. Accrued salaries were $1,000 at December 31, Year 3.

Answer 1

(a)				Pacilio security services Inc.
				Genral journal,Year 3
	Event	Account title					Debit	Credit
	1	Salaries payable					1200
		Cash						1200
		(Paid salaries due for last year)
	2	Notes payable					2000
		Cash						2000
		(Paid balance of the debt owed)
	3	Cash					11000
		Accounts receivable					21000
		Service revenue						32000
		(Security services performed)
	4	Prepaid rent					3000
		Cash						3000
		(Rent paid inadvance)
	5	Supplies					700
		Accounts payable						700
		(Purchased supplies on account)
	6	Salaries expense					9000
		Cash						9000
		(Salaries paid)
	7	Other operating expenses					4200
		Accounts payable						4200
		(Other operating expenses incurred)
	8	Cash					1200
		Unearned revenue						1200
		(Cash received in advance for services to be provided)
	9	Cash					19000
		Accounts receivable						19000
		(Accounts receivable collected)
	10	Accounts payable					5950
		Cash						5950
		(Accounts payable paid)
	11	Advertising expense					1800
		Cash						1800
		(Advertising expense paud)
	12	Dividends					4650
		Cash						4650
		(Dividend paid)
	13	No entry required since land is always recorded
		at cost
	14	Supplies expense		(65+700-120)			645
		Supplies						645
		(Supplies used)
	15	Rent expense		(Note:1)			2800
		Prepaid rent						2800
		(Rent expired)
	16	Unearned revenue		1200*(3/12)			500
		Service revenue						500
		(Revenue earned from Oct 1 to Dec 31-3 months)
	17	Salaries expense					1000
		Salaries payable						1000
		(Salaries accrued)

Note: 1 Rent expired during year 2 $ 800 Prepaid rent beg ball Rent from May 1 to Dec 31-8 months Total 3000*(8/12) 2000 2800 Note:2 Unearned revenue earned $ 200 Unearned revenue beg bal. Revenue earned from Oct I to Dec 31 1200*(3/12) Total 300 500 (b) Event Bal. Cash Debit Event 8900 Credit Event 1 1200 Bal. Accounts receivable Debit Event Credit 1500 9 19000 3 21000 22500 190001 3500 3 11000 2 4 8 9 1200 19000 2000 3000 9000 Bal. 6 10 11 5950 1800 4650 12

121 4650 27600 40100 Bal 12500 Event Bal. Supplies Debit Event 65 Credit 645 Event Bal. Prepaid rent Debit Event 800 Credit 2800 14 15 5 700 4 3000 3800 765 645 2800 Bal. 120 Bal. 1000 Land Event Credit Event Credit Event Bal. Debit 4000 Accounts payable Debit Event 10 5950 Bal. 5 1050 7 700 4200 5950 5950 Event Event Salaries payable Debit Event Credit 1 1200 Bal. 1200 17 1000 16 Unearned revenue Debit Event Credit 500 Bal. 200 8 1200 500 1400 Bal. 900 1200 2200 1000 Bal.

Event Event Notes payable Debit Event 2 2000 Bal. 2000 Credit Common stock Debit Event Bal. Credit 2000 2000 8000 Event Retained earnings Debit Event Bal. Event Dividends Debit Event 12 4650 Credit 2815 Credit Service revenue Debit Event Event Event Credit 3 32000 16 500 Advertising expense Debit Event Credit 11 18001 0 32500 32500 Bal. Event Other operating expense Debit Event Credit 7 4200 Event Rent expense Debit Event 15 2800 Credit Event Salaries expense Debit Event 6 9000 Credit Event Supplies expense Debit Event 14 645 Credit 17 1000

17 1000 10000 0 Bal. 10000 (c) Trial balance Debit Credit 12500 3500 120 1000 4000 900 1000 8000 Cash Accounts receivable Supplies Prepaid rent Land Unearned revenue Salaries payable Common stock Retained earnings Dividends Security service (Service revenue) Advertising expense Other operating expense Rent expense Salaries expense Supplies expense 2815 4650 32500 1800 4200 2800 10000 645 45215 45215)