Question

The trial balance of Pacilio Security Services, Inc. as of January 1, Year 5, had the following normal balances:

Cash	$	62,860
Accounts receivable		20,500
Supplies		150
Prepaid rent		2,000
Merchandise inventory (9 @ $240)		2,160
Land		4,000
Accounts payable		980
Salaries payable		1,500
Common stock		50,000
Retained earnings		39,190

During Year 5, Pacilio Security Services experienced the following transactions:

1. Paid the salaries payable from Year 4.
2. On January 15, purchased 20 standard alarm systems for cash at a cost of $250 each.
3. On February 1, paid the accounts payable of $980, but not within the discount period. (The company uses the gross method.)
4. On March 1, leased a business van. Paid $4,800 for one year’s lease in advance.
5. Paid $7,200 on May 1 for one year’s rent on the office in advance.
6. Purchased with cash $500 of supplies to be used over the next several months by the business.
7. Purchased with cash another 25 alarm systems on August 1 for resale at a cost of $260 each.
8. On September 5, purchased on account 30 standard alarm systems at a cost of $265.
9. Installed 60 standard alarm systems for $33,000. Sales of $22,000 were on account, while $11,000 were cash sales.
10. Record the cost of goods sold related to the sale from Event 9 using the perpetual FIFO method.
11. Made a full refund to a dissatisfied customer who returned her alarm system. The sale had been a cash sale for $550 with a cost of $260. Record the reversal of revenue.
12. Made a full refund to a dissatisfied customer who returned her alarm system. The sale had been a cash sale for $550 with a cost of $260. Record the reversal of cost.
13. Paid installers and other employees a total of $21,000 cash for salaries.
14. Sold $45,000 of monitoring services during the year. The services are billed to the customers each month.
15. Sold an additional monitoring service for $1,200 for one year’s service. The customer paid the full amount of $1,200 on October 1.
16. Collected $74,000 of accounts receivable during the year.
17. Paid an additional $6,000 to settle some of the accounts payable.
18. Paid $3,500 of advertising expense during the year.
19. Paid $2,320 of utilities expense for the year.
20. Paid a dividend of $15,000 to the shareholders.

Adjustments

21. There was $200 of supplies on hand at the end of the year.
22. Recognized the expired rent from the prior year, van and office building for the year.
23. Recognized the revenue earned from transaction 15.
24. Accrued salaries at December 31, Year 5, were $1,000.

General Journal tab - Prepare the journal entries to record transactions (1) through (20). Then prepare the necessary adjusting entries (21) through (24) to correctly report net income for the period. Then record the closing entries (25) through (27) as of December 31, Year 5. (I already did)

General Ledger tab - Each journal entry is posted automatically to the general ledger. (done)

Trial Balance tab - The ending balance values from the General Ledger tab flows through to the Trial Balance tab. ( debit and credit totals don't match)

Income Statement tab - Use the drop-down to select the accounts properly included on the income statement.

Statement of Changes in Stockholders' Equity tab - Prepare the statement of changes in stockholders’ equity for the year ended December 31, Year 5.

Balance Sheet tab - Prepare a classified Balance Sheet at December 31, Year 5.

Statement of Cash flows - Prepare the statement of cash flow for year ended December 31, Year 5.

Analysis tab - Use a horizontal statements model to show how each transaction affects the balance sheet, income statement, and statement of cash flows.

I need help with the trial balance, income statement tab, statement of changes in stockholder's equity tab, balance sheet tab, statement of cash flows and analysis tab. Thank you!

Answer 1

a.

Pacilio Security Services, Inc. General Journal, year 5
Event	Account title	Debit	Credit
1.	Salaries Payable	1,500
	Cash		1,500
2. 1/15	Merchandise Inventory	5,000
	Cash		5,000
3. 2/1	Accounts Payable	980
	Interest Expense	20
	Cash		1,000
4. 3/1	Prepaid Rent (van)	4,800
	Cash		4,800
5. 5/1	Prepaid Rent (office)	7,200
	Cash		7,200
6.	Supplies	500
	Cash		500
7. 8/1	Merchandise Inventory	6,500
	Cash		6,500
8. 9/5	Merchandise Inventory	7,950
	Accounts Payable		7,950
9a.	Accounts Receivable	22,000
	Cash	11,000
	Alarm Sales		33,000
9b.	Cost of Goods Sold*	15,250
	Merchandise Inventory		15,250

*Cost of Goods Sold:

  9 @ $240 =   $2,160

  20 @ 250 =   5,000

  25 @ 260 =   6,500

  6 @ 265 =   1,590

Total Cost of Goods Sold:   $15,250

Pacilio Security Services, Inc. General Journal, year 5
Event	Account Titles	Debit	Credit
10a.	Alarm Sales	550
	Cash		550
10b.	Merchandise Inventory	260
	Cost of Goods Sold		260
11.	Salaries Expense	21,000
	Cash		21,000
12.	Accounts Receivable	45,000
	Monitoring Service Revenue		45,000
13.	Cash	1,200
	Unearned Revenue		1,200
14.	Cash	74,000
	Accounts Receivable		74,000
15.	Accounts Payable	6,000
	Cash		6,000
16.	Advertising Expense	3,500
	Cash		3,500
17.	Utilities Expense	2,300
	Cash		2,300
18.	Dividends	15,000
	Cash		15,000
19.	Supplies Expense ($150 + $500 -  $200)	450
	Supplies		450
20.	Rent Expense*	10,800
	Prepaid Rent		10,800

*Expired van lease paid in year 5: ($4,800 x 10/12) $4,000

Office:     Expired rent paid in 214: ($6,000 x 4/12)   2,000

  Expired rent paid in year 5: ($7,200 x 8/12) 4,800

Total rent expense for year 5 $10,800

Pacilio Security Services, Inc. General Journal, year 5
Event	Account Title	Debit	Credit
21.	Unearned Revenue*	300
	Monitoring Service Revenue		300
22.	Salaries Expense	1,000
	Salaries Payable		1,000

*Revenue collected in year 5, and earned in year 5 ($1,200 x 3/12) $300

Total unearned revenue earned in year 5   $300

b. Pacilio Security Services, Inc. T accounts for, Year 5

b.Pacilio Security Services, Inc. T - accounts , Year 5

c.

Pacilio Security Services, Inc. Trial Balance December 31, year 5
Cash	$ 74,210
Accounts Receivable	13,500
Supplies	200
Prepaid Rent	3,200
Merchandise Inventory	6,620
Land	4,000
Accounts Payable		$1,950
Unearned Revenue		900
Salaries Payable		1,000
Common Stock		50,000
Retained Earnings		39,190
Dividends	15,000
Alarms Sales		32,450
Monitoring Service Revenue		45,300
Cost of Goods Sold	14,990
Advertising Expense	3,500
Rent Expense	10,800
Salaries Expense	22,000
Supplies Expense	450
Utilities Expense	2,300
Interest Expense	20
Totals	$170,790	$170,790

d.

Pacilio Security Services, Inc. Income Statement For the Year Ended December 31, 2015
	Revenues
	Monitoring Service Revenue	$45,300
	Alarm Sales	32,450
	Total Revenues		$77,750
	Cost of Goods Sold		(14,990)
	Gross Margin		62,760
	Expenses
	Advertising Expense	$ 3,500
	Rent Expense	10,800
	Salaries Expense	22,000
	Supplies Expense	450
	Utilities Expense	2,300
	Total Operating Expenses		39,050
	Net Operating Income		23,710
	Non-Operating Items
	Interest Expense		(20)
	Net Income		$23,690

  

Pacilio Security Services, Inc. Statement of Changes in Stockholders' Equity For the Year Ended December 31, year 5
	Beginning Common Stock	$50,000
	Plus: Common Stock Issued	-0-
	Ending Common Stock		$50,000
	Beginning Retained Earnings	$39,190
	Plus: Net Income	23,690
	Less: Dividends	(15,000)
	Ending Retained Earnings		47,880
	Total Stockholders' Equity		$97,880

Pacilio Security Services, Inc. Balance Sheet As of December 31, year 5
	Assets
	Cash	$74,210
	Accounts Receivable	13,500
	Supplies	200
	Prepaid Rent	3,200
	Merchandise Inventory	6,620
	Land	4,000
	Total Assets		$101,730
	Liabilities
	Accounts Payable	$ 1,950
	Salaries Payable	1,000
	Unearned Revenue	900
	Total Liabilities		$  3,850
	Stockholders' Equity
	Common Stock	$50,000
	Retained Earnings	47,880
	Total Stockholders' Equity		97,880
	Total Liabilities and Stockholders' Equity		$101,730

Pacilio Security Services, Inc. Statement of Cash Flows For the Year Ended December 31, year 5
	Cash Flows From Operating Activities:
	Cash Receipts from Customers1	$ 85,650
	Cash Payment for Expenses2	(59,300)
	Net Cash Flow from Operating Activities		$26,350
	Cash Flows From Investing Activities:
	Cash Flows From Financing Activities:
	Cash Payments for Dividends	$(15,000)
	Net Cash Flow from Financing Activities		(15,000)
	Net Increase in Cash		11,350
	Plus: Beginning Cash Balance		62,860
	Ending Cash Balance		$74,210

¹Cash Receipts from Customers:

   Cash Sales less sales return $11,650

   Collection of Accounts Receivable     74,000

   Total Cash from Customers   $85,650

²Cash Payment for Expenses

  Payment of Prepaid Rent $12,000

  Payment of Salaries     22,500

  Payment of Accounts Payable 6,980

  Payment of Advertising    3,500

  Payment for Supplies   500

  Payment for Utilities     2,300

  Payment for Inventory 11,500

  Payment for Interest   20

  Total Cash Payment for Expenses $59,300

e.

Date	Account Titles	Debit	Credit
	Closing Entries
Dec. 31	Alarm Sales Revenue	32,450
	Monitoring Service Revenue	45,300
	Retained Earnings		77,750
Dec. 31	Retained Earnings	54,060
	Cost of Goods Sold		14,990
	Advertising Expense		3,500
	Rent Expense		10,800
	Salaries Expense		22,000
	Supplies Expense		450
	Utilities Expense		2,300
	Interest Expense		20
Dec. 31	Retained Earnings	15,000
	Dividends		15,000

f.Pacilio Security Services, Inc. T-accounts Year 5,

Pacilio Security Services, Inc. T-accounts Year 5,

Pacilio Security Systems Sales and Service Post-Closing Trial Balance December 31, year 5
	Account Titles	Debit	Credit
	Cash	$74,210
	Accounts Receivable	13,500
	Supplies	200
	Prepaid Rent	3,200
	Merchandise Inventory	6,620
	Land	4,000
	Accounts Payable		$ 1,950
	Salaries Payable		1,000
	Unearned Revenue		900
	Common Stock		50,000
	Retained Earnings		47,880
	Totals	$101,730	$101,730