Financial Accounting: Comprehensive Problem 8-1 The trial balance of Pacilio Security Services Inc

Financial Accounting 
Comprehensive Problem 8-1 
The trial balance of Pacilio Security Services Inc. as of January 1, 2018, had the following normal balances: 
Cash 93,708 
Petty Cash 100 
Accounts 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, Pacilio Security Services experienced the following transactions: 
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. 

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. 

a. Record the above transactions in general journal form. 
b. Post the transactions to the T-accounts. 
c. Prepare a trial balance.  
d. Prepare an income statement, statement of changes in stockholders’ equity, a classified 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 an after-closing trial balance.
Powered by