Question
COMPREHENSIVE PROBLEM The trial balance of Pacilio Security Services Inc. as of January 1, 2020, had the following normal balances: During 2020 Pacilio Security Services
COMPREHENSIVE PROBLEM
The trial balance of Pacilio Security Services Inc. as of January 1, 2020, had the following normal balances:
During 2020 Pacilio Security Services experienced the following transactions:
1. Paid the sales tax payable from 2019.
2. Paid the balance of the payroll liabilities due for 2019 (federal income tax, FICA taxes, and unemployment taxes).
3. On January 1, 2020, purchased land and a building for $150,000. The building was appraised at $125,000 and the land at $25,000. Pacilio paid $50,000 cash and financed the balance. The balance was financed with a 10-year installment note. The note had an interest rate of 7 percent and annual payments of $14,238 due on the last day of the year.
4. On January 1, 2020, issued $50,000 of 6 percent, five year bonds. The bonds were issued at 98.
5. Purchase $660 of supplies on account.
6. Purchased 170 alarm systems at a cost of $300. Cash was paid for the purchase.
7. After numerous attempts to collect from customers, wrote off $2,450 of uncollectible accounts receivable.
8. Sold 160 alarm systems for $580 each plus sales tax of 5 percent. All sales were on account. (Be sure to compute cost of goods sold using the FIFO cost flow method.)
9. Billed $120,000 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 $84,000 were sales on account. Sales tax is not charged on this service.
10. Replenished the petty cash fund on June 30. The fund had $11 cash and receipts of $65 for yard mowing and $24 for office supplies expense.
11. Collected the amount due from the credit card company.
12. Paid the sales tax collected on $85,000 of the alarm sales.
13. Collected $167,000 of accounts receivable during the year.
14. Paid installers and other employees a total of $82,000 for salaries for the year. Assume the Social Security tax rate is 6 percent and the Medicare tax rate is 1.5 percent. Federal income taxes withheld amounted to $9,600. The net amount of salaries was paid in cash.
15. Paid $1,250 in warranty repairs during the year.
16. On September 1, paid the note and interest owed to State Bank.
CashPettycashAccountsreceivableAllowancefordoubtfulaccountsSuppliesPrepaidrentMerchandiseinventory(38@S290)EquipmentVanAccumulateddepreciationSalestaxpayableEmployeeincometaxpayableFICA-SocialSecuritytaxpayableFICA-MedicaretaxpayableWarrantypayableUnemploymenttaxpayableInterestpayableNotespayableCommonstockRetainedearnings$122,47510027,4004,3901653,00011,0209,00027,00023,05029050060015031263032012,00050,000107,918Step by Step Solution
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