Question

The trial balance of Pacilio Security Services, Inc. as of January 1, Year 4, had the following normal balances: Cash Accounts Receivable Supplies Prepaid Rent Land Unearned Revenue Salaries Payable Common Stock Retained Earnings $12,500 3,500 120 1,000 4,000 900 1,000 8,000 11,220 In Year 4, Pacilio Security Services decided to expand its business to sell security systems and offer 24-hour alarm monitoring services It plans to phase out its current service of providing security personnel at various events. The following summary transactions occurred during Year 4 1. Paid the salaries payable from Year 3 2. Acquired an additional $42,000 cash from the issue of common stock 3. Rented a larger building on May 1; paid $6,000 for 12 months' rent in advance 4. Paid $800 cash for supplies to be used over the next several months by the business 5. Purchased alarm systems for resale at a cost of $12,000. The alarm systems were purchased on account with the terms 2/10, n/30 6. Returned alarm systems that had a cost of $240 7. Installed alarm systems during the year for a total sales amount of $20,000. Sales of $15,000 were on account, while $5,000 were cash sales 8. The cost of the systems sold in Event 7 amounted to $9,440 9. Paid the installers and other employees a total of $9,500 in salaries 10. Sold $36,000 of monitoring services for the year. The services are billed to the customers each month. 11. Paid cash on accounts payable. The payment was made before the discount period expired. At the time of purchase, the inventory has a cost of $8,000 and was purchased under the terms 2/10, n/30 12 Paid cash to settle additional accounts payable in the amount of $2,780. The payment was made after the discount period expired 13. Collected $43,000 of accounts receivable during the year 14. Performed $12,000 of security services for area events; $9,000 was on account and $3,000 was for cash. 15. Paid advertising cost of $1,620 for the year. 16. Paid $1,100 for utilities expense for the year. 17. Paid a dividend of $12,000 to the shareholders. Adjustment Information 18. Supplies of $150 were on hand at the end of the year. 19. Recognized the expired rent for the year . Recognized the balance of the unearned revenue; cash was received in Year 3 21. Accrued salaries at December 31, Year 4, were $1,500

Answer 1

Balance Sheet of Pacilio Security Services is as prepared below:

Pacilio Security Services, Inc
Balance Sheet
As at December 31, Year 4
Particulars	Amount ($)	Amount ($)
ASSETS
Current Assets:
Cash	62,860
Account Receivable	20,500
Supplies	150
Prepaid Rent	3,000
Inventory	2,160
Total Current Assets		88,670
Land		4,000
Total Assets		92,670
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities :
Current Liabilities
Accounts Payable	980
Salaries payable	1,500
Total Current Liabilities		2,480
Total Stockholders' Equity
Common Stock	50,000
Retained earnings	40,190
Total Stockholders' Equity		90,190
Total Liabilities and stockholders’ equity		92,670

Working:

		1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	Total
Cash	12,500	-1,000	42,000	-6,000	-800			5,000		-9,500		-7,840	-2,780	43,000	3,000	-1,620	-1,100	-12,000					62,860
Accounts Receivable	3,500							15,000			36,000			-43,000	9,000								20,500
Supplies	120				800														-770				150
Prepaid Rent	1,000			6,000																-4,000			3,000
Land	4,000																						4,000
Unearned Revenue	900																				-900		0
Salaries payable	1,000	-1,000																				1,500	1,500
Common Stock	8,000		42,000																				50,000
Retained Earnings	11,220																						11,220
Inventory						12,000	-240		-9,440			-160											2,160
Accounts Payable						12,000	-240					-8,000	-2,780										980
Salaries Expense										9,500												1,500	11,000
Sales								20,000															20,000
Cost of goods sold									9,440														9,440
Service Revenue											36,000				12,000						900		48,900
Advertising Expense																1,620							1,620
Utilities Expense																	1,100						1,100
Dividend																		12,000					12,000
Supplies Expense																			770				770
Rent Expense																				4,000			4,000

Answer 2

Journal entries are as prepared below:

Date	Particulars	L.F	Amount ($)	Amount ($)
1	Salaries Payable		1,000
	Cash			1,000
2	Cash		42,000
	Common Stock			42,000
3	Prepaid Rent		6,000
	Cash			6,000
4	Supplies		800
	Cash			800
5	Inventory		12,000
	Accounts Payable			12,000
6	Accounts Payable		240
	Inventory			240
7	Cash		5,000
	Account Receivable		15,000
	Sales			20,000
8	Cost of goods sold		9,440
	Inventory			9,440
9	Salaries Expense		9,500
	Cash			9,500
10	Account Receivable		36,000
	Service Revenue			36,000
11	Accounts Payable		8,000
	Inventory			160
	Cash			7,840
12	Accounts Payable		2,780
	Cash			2,780
13	Cash		43,000
	Account Receivable			43,000
14	Cash		3,000
	Account Receivable		9,000
	Sales			12,000
15	Advertising Expense		1,620
	Cash			1,620
16	Utilities Expense		1,100
	Cash			1,100
17	Dividend		12,000
	Cash			12,000
18	Supplies Expense		770
	Supplies			770
19	Rent Expense		4,000
	Prepaid Rent			4,000
20	Unearned Revenue		900
	Service Revenue			900
21	Salaries Expense		1,500
	Salaries payable			1,500

Answer 3