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The account balances of Pacilio Security Services, Inc. as of January 1 Year 4. are shown here: 10. Paid cash on accounts payable. The payment was made before the discount period 11. Paid cash to settle additional accounts payable. The payment was made after the discount period expired. At the time of purchase, the inventory had a cost of $2,780. supplies on hand at the end of the year. 15. Recognized the expired rent. 16. Recognized the earned revenue from Year 2 and transaction no. 8. 17. Accrued salaries were $1.000 at December 31, Year 3. YEAR 4 ACCOUNTING PERIOD Reference: Chapter 4 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 se- curity 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 50 alarm systems for resale at a cost of $12,000. The alarm systems were pur- chased on account with the terms 2/10,n/30. 6. Returned one of the alarm systems that had a cost of $240. 7. Installed 40 alarm systems during the year for a total sales amount of $20,000. The cost of these systems amounted to $9,440. Sales of $15,000 were on account, while $5,000 were cash sales. 8. Paid the installers and other employees a total of $9,500 in salaries. 9. Sold $36,000 of monitoring services for the year. The services are billed to the customers each month. expired. At the time of purchase, the inventory had a cost of $8,000. 12. Collected $43.000 of accounts receivable during the year. 13. Performed $12.000 of security services for area events: $9,000 was on account and $3,000 was for cash. 14. Paid advertising cost of $1,620 for the year. 15. Paid $1,100 for utilities expense for the year. 16. Paid a dividend of $12,000 to the shareholders. Adjustment Information 17. Supplies of $150 were on hand at the end of the year. 18. Recognized the expired rent for the year. 19. Recognized the balance of the unearned revenue; cash was received in Year 3. 20. Accrued salaries at December 31, Year 4. were $1,500. YEAR 5 ACCOUNTING PERIOD Reference: Chapter 5 The account balances of Pacilio Security Services, Inc. as of January 1, Year 5, are shown here Cash Accounts receivable Supplies Prepaid rent Merchandise inventory 19 a $240) Land Accounts payable Salaries payable Common stock Retained earnings $62,860 20,500 150 2,000 2,160 4,000 980 1,500 50,000 39,190 20. Accrued salaries at December 31, Year 4, were $1,500. 19. Recognized the bal YEAR 5 ACCOUNTING PERIOD Reference: Chapter 5 The account balances of Pacilio Security Services, Inc. as of January 1, Year 5, are shown here: Cash Accounts receivable Supplies Prepaid rent Merchandise inventory (9 a $240) Land Accounts payable Salaries payable Common stock Retained earnings $62,860 20.500 150 2,000 2,160 4.000 980 1,500 50.000 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 each. 9. Installed 60 standard alarm systems for $33,000. Sales of $22.000 were on account, while $11,000 were cash sales. (Note: Be sure to record cost of goods sold using the perpetual FIFO method.) 10. 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. 11. Paid installers and other employees a total of $21,000 cash for salaries. 12. Sold $45,000 of monitoring services during the year. The services are billed to the cus- tomers each month. 13. 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. During Year 6. Pacilio Security Services experienced the following transactions: 14. Collected $ 74,000 of accounts receivable during the year. 15. Paid an additional $6,000 to settle some of the accounts payable. 16. Paid $3,500 of advertising expense during the year. 17. Paid $2.320 of utilities expense for the year. 18. Paid a dividend of $15,000 to the shareholders. Adjustments 19. There was $200 of supplies on hand at the end of the year. 20. Recognized the expired rent for both the van and the office building for the year. 21. Recognized the revenue earned from transaction 13. 22. Accrued salaries at December 31, Year 5, were $1,000. YEAR 6 ACCOUNTING PERIOD Reference: Chapter 6 The account balances of Pacilio Security Services, Inc. as of January 1, Year 6, are shown here Cash Accounts Receivable Supplies Prepaid Rent Merchandise Inventory (24 @ $265; 1 @ $260) Land Accounts Payable Unearned Revenue Salaries Payable Common Stock Retained Earnings 1 Paid the salaries pavable from Year 5. $74,210 13,500 200 3,200 6.620 4.000 1,950 900 1.000 50,000 47,880