In: Accounting
The trial balance of Pacilio Security Services, Inc. as of
January 1, Year 6, had the following normal balances:
Cash | $ | 74,210 | |
Accounts Receivable | 13,500 | ||
Supplies | 200 | ||
Prepaid Rent | 3,200 | ||
Merchandise Inventory (24 @ $265; 1 @ $260) | 6,620 | ||
Land | 4,000 | ||
Accounts Payable | 1,950 | ||
Unearned Revenue | 900 | ||
Salaries Payable | 1,000 | ||
Common Stock | 50,000 | ||
Retained Earnings | 47,880 | ||
During Year 6, Pacilio Security Services experienced the following
transactions:
1. Paid the salaries payable from Year 5.
2. On March 1, Year 6, Pacilio established a $100 petty cash fund to handle small expenditures.
3. Paid $4,800 on March 1, Year 6, for a one-year lease on the company van in advance.
4. Paid $7,200 on May 2, Year 6, for one year’s office rent in advance.
5. Purchased $400 of supplies on account.
6. Purchased 100 alarm systems for $28,000 cash during the year.
7. Sold 102 alarm systems for $57,120. All sales were on account.
8. Record the cost of goods sold related to the sale from Event 7 using the FIFO method.
9. Paid $2,100 on accounts payable during the year.
10. Replenished the petty cash fund on August 1. At this time, the petty cash fund had only $7 of currency left. It contained the following receipts: office supplies expense, $23; cutting grass, $55; and miscellaneous expense, $14.
11. Billed $52,000 of monitoring services for the year.
12. Paid installers and other employees a total of $25,000 cash for salaries.
13. Collected $89,300 of accounts receivable during the year.
14. Paid $3,600 of advertising expense during the year.
15. Paid $2,500 of utilities expense for the year.
16. Paid a dividend of $10,000 to the shareholders.
Adjustment
17. There was $160 of supplies on hand at the end of the year.
18. Recognized the expired rent for both the van and the office building for the year. (The rent for both the van and the office remained the same for Year 5 and Year 6.)
19. Recognized the balance of the revenue earned in Year 6 where cash had been collected in Year 5.
20. Accrued salaries at December 31, Year 6, were $1,400.
The following information is available for the bank reconciliation:
(1) Checks written but not paid by the bank, $8,350.
(2) A deposit of $6,500 made on December 31, Year 6, had been recorded but was not shown on the bank statement.
(3) A debit memo for $55 for a new supply of checks. (Hint: Use Office Supplies Expense account.)
(4) A credit memo for $30 for interest earned on the checking account.
(5) An NSF check for $120.
(6) The balance shown on the bank statement was $80,822.
Recorded any debit memos or checks not included on books as part of the bank reconciliation.
Recorded any credit memos or interest received not included on books as part of the bank reconciliation.
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*****Prepare a General Journal, Income Statement, Change in Stockholders Equity, Balance Sheet, Statement of Cash Flows, Bank Reconciliation Statement, and an Analysis******
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Date | Account | Debit | Credit | |
1 | Salaries Payable | $ 1,000 | ||
Cash | $ 1,000 | |||
Mar 1 | Petty Cash | $ 100 | ||
Cash | $ 100 | |||
Mar 1 | Prepaid Lease | $ 4,800 | ||
Cash | $ 4,800 | |||
May 2 | Prepaid Rent | $ 7,200 | ||
Cash | $ 7,200 | |||
5 | Supplies | $ 400 | ||
Accounts Payable | $ 400 | |||
6 | Merchandise Inventory | $ 28,000 | ||
Cash | $ 28,000 | |||
7 | Accounts Receivable | $ 57,120 | ||
Sales | $ 57,120 | |||
8 | Cost of Goods Sold | $ 28,180 | ||
Merchandise Inventory | $ 28,180 | |||
24*265 | ||||
1*260 | ||||
77*280 | ||||
9 | Accounts Payable | $ 2,100 | ||
Cash | $ 2,100 | |||
10 | Office Supplies Expense | $ 23 | ||
Cutting Expense | $ 55 | |||
Miscellaneous Expenses | $ 14 | |||
Cash Short/Over | $ 1 | |||
Cash | $ 93 | |||
11 | Accounts Receivable | $ 52,000 | ||
Service Revenue | $ 52,000 | |||
12 | Salaries Expense | $ 25,000 | ||
Cash | $ 25,000 | |||
13 | Cash | $ 89,300 | ||
Accounts Receivable | $ 89,300 | |||
14 | Advertising Expense | $ 3,600 | ||
Cash | $ 3,600 | |||
15 | Utilities Expense | $ 2,500 | ||
Cash | $ 2,500 | |||
16 | Dividends | $ 10,000 | ||
Cash | $ 10,000 | |||
Adjusting | ||||
Dec 31 | Supplies Expenses | $ 440 | ||
Supplies | $ 440 | |||
(200+400-160) | ||||
Dec 31 | Lease Expense | $ 4,000 | 4800/12*10 | |
Rent Expense | $ 7,200 | |||
Prepaid Lease | $ 4,000 | |||
Prepaid Rent | $ 7,200 | |||
Dec 31 | Unearned Revenue | $ 900 | ||
Service Revenue | $ 900 | |||
Dec 31 | Salaries Expense | $ 1,400 | ||
Salaries Payable | $ 1,400 | |||
Bank Reco: | ||||
3 | Office Supplies Expense | $ 55 | ||
Cash | $ 55 | |||
4 | Cash | $ 30 | ||
Interest Income | $ 30 | |||
5 | Accounts Receivable | $ 120 | ||
Cash | $ 120 |
Trial | ||||||
Beginning | Year 6 Trx | Final | ||||
Accounts | Debit | Credit | Debit | Credit | Debit | Credit |
Cash | $ 74,210 | $ 4,763 | $ 78,973 | |||
Petty Cash | $ 100 | $ 100 | ||||
Merchandise Inventory | $ 6,620 | $ 180 | $ 6,440 | |||
Accounts Receivable | $ 13,500 | $ 19,940 | $ 33,440 | |||
Prepaid Rent | $ 3,200 | $ - | $ 3,200 | |||
Prepaid Lease | $ 800 | $ 800 | ||||
Supplies | $ 200 | $ 40 | $ 160 | |||
Land | $ 4,000 | $ 4,000 | ||||
Accounts Payable | $ 1,950 | $ 1,700 | $ 250 | |||
Salaries Payable | $ 1,000 | $ 400 | $ 1,400 | |||
Unearned Revenue | $ 900 | $ 900 | $ - | |||
Common Stock | $ 50,000 | $ 50,000 | ||||
Retained Earning | $ 47,880 | $ 47,880 | ||||
Dividends | $ 10,000 | $ 10,000 | ||||
Sales | $ 57,120 | $ 57,120 | ||||
Service Revenue | $ 52,900 | $ 52,900 | ||||
Interest Income | $ 30 | $ 30 | ||||
Cost of Goods Sold | $ 28,180 | $ 28,180 | ||||
Cutting Expense | $ 55 | $ 55 | ||||
Advertising Expense | $ 3,600 | $ 3,600 | ||||
Lease Expense | $ 4,000 | $ 4,000 | ||||
Rent Expense | $ 7,200 | $ 7,200 | ||||
Miscellaneous Expenses | $ 14 | $ 14 | ||||
Office Supplies expense | $ 78 | $ 78 | ||||
Salaries Expense | $ 26,400 | $ 26,400 | ||||
Supplies Expenses | $ 440 | $ 440 | ||||
Utilities Expense | $ 2,500 | $ 2,500 | ||||
Total | $ 101,730 | $ 101,730 | $ 110,670 | $ 110,670 | $ 209,580 | $ 209,580 |
a. Income Statement: | ||||||
Sales Revenue | $ 57,120 | |||||
Service Revenue | $ 52,900 | |||||
Total Revenue | $ 110,020 | |||||
Less: Cost of Goods Sold | $ 28,180 | |||||
Gross Margin | $ 81,840 | |||||
Less: Operating Expenses: | ||||||
Cutting Expense | $ 55 | |||||
Advertising Expense | $ 3,600 | |||||
Lease Expense | $ 4,000 | |||||
Rent Expense | $ 7,200 | |||||
Miscellaneous Expenses | $ 14 | |||||
Office Supplies expense | $ 78 | |||||
Salaries Expense | $ 26,400 | |||||
Supplies Expenses | $ 440 | |||||
Utilities Expense | $ 2,500 | $ 44,287 | ||||
Operating Income | $ 37,553 | |||||
Add: Interest Revenue | $ 30 | |||||
Net Income | $ 37,583 | |||||
b. Statement of change in Equity: | ||||||
Common Stock | A | $ 50,000 | ||||
Retained Earning, beginning balance | $ 47,880 | |||||
Less: Net Income | $ 37,583 | |||||
Less: Dividend | $ -10,000 | |||||
Retained Earning, ending balance | B | $ 75,463 | ||||
Total Equity | $ 125,463 | |||||
c. Balance Sheet | ||||||
Assets | ||||||
Current Assets: | ||||||
Cash | $ 78,973 | |||||
Petty Cash | $ 100 | |||||
Merchandise Inventory | $ 6,440 | |||||
Accounts Receivable | $ 33,440 | |||||
Prepaid Rent | $ 3,200 | |||||
Prepaid Lease | $ 800 | |||||
Supplies | $ 160 | |||||
Total Current Assets | $ 123,113 | |||||
Land | $ 4,000 | |||||
Land | $ 4,000 | |||||
Total Assets | $ 127,113 | |||||
Liabilities | ||||||
Current Liabilities: | ||||||
Accounts Payable | $ 250 | |||||
Salaries Payable | $ 1,400 | |||||
Total Current Liabilities | $ 1,650 | |||||
Total Liabilities | $ 1,650 | |||||
Stockholder's Equity: | ||||||
Common Share | $ 50,000 | |||||
Retained Earning | $ 75,463 | |||||
Total Stockholder's Equity | $ 125,463 | |||||
Total Liabilities and Stockholder's Equity | $ 127,113 | $ - | ||||
d. Statement of Cash Flow | ||||||
Net Income | $ 37,583 | |||||
Adjustment to Net income: | ||||||
Cash Over | ||||||
Increase in Receivable | $ -19,940 | |||||
Decrease in inventory | $ 180 | |||||
Decrease in supplies | $ 40 | |||||
Increase in Prepaid Lease | $ -800 | |||||
Decrease in Accounts Payable | $ -1,700 | |||||
Decrease in Unearned Revenue | $ -900 | |||||
Increase in Salaries Payble | $ 400 | |||||
Net Cash flow from Operating Activities | $ 14,863 | |||||
Cash flow from Investing activities: | ||||||
Net Cash from Investing Activities | $ - | |||||
Cash flow from financing activities: | ||||||
Paymen tof Dividends | $ -10,000 | |||||
Net Cash from Financing Activities | $ -10,000 | |||||
Net Increase in Cash | $ 4,863 | |||||
Add: Beginning Balance | $ 74,210 | |||||
Ending Balance (Including Petty) | $ 79,073 | |||||
f. Bank Reco | ||||||
Unadjusted Balance as per Bank | $ 80,822 | |||||
Less: Outstanding Checks | $ -8,350 | |||||
Add: Deposit in Transit | $ 6,500 | |||||
Cash Balance adjusted (before over recording) | $ 78,972 |