PROBLEM

The trial balance of Pacilo Securitv Services Ine. as of Januarv I. 2013. had the following nor-

mallalance.

Cash

Accounts receivable

Supplies

Prepaid rent

Merchandise inventory (9 @ $240)

Land

Accounts payable

Salaries payable

Common stock

Retained earninas

$62,860

20,500

150

2,000

2,160

4,000

980

1,500

50,000

39.190

During 2015. Pacilio Security Services experienced the following transactions

1. Paid the salaries pavable from 2014

2. On Januarv IS. purchased 20 standard alarm svstems for cash at a cost of S250 each.

3. On February I, paid the accounts payable of $980, but not within the discount period. (The

company uses the gross method.)

On March 1, leased a business van. Paid $4,800 for one year's lease in advance.

S. Paid $7,200 on May I for one year's rent on the oflice in advance.

6. Purchased with cash S500 of supplies to be used over the next several months by the business.

7. Purchased with cash another 25 alarm systems on August I for resale at a cost of S260

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. S22.000 of the sales were on account and

$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 vear. The services are billed to the customers

13. Sold an additional monitoring service for $1.200 for one ear's service. The customer paid

the full amount of $1.200 on October I.

14. Collected $74.000 of accounts receivable during the year

15. Paid an additional S6,000 to settle some of the accounts payable.

16. Paid S3. 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

Accounting for Inventories

hen

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. 2015. were SI.O00.

Required

Record the above transactions in general iournal form

Post the transactions to l-accounts.

Prepare a trial balance

d. Prepare an income statement, statement of changes in stockholders equity. balance sheet.

and statement of cash flows.

Close the temporary accounts to retained earnings.

f. Post the closing entries to the 1-accounts and prepare an alter-closing trial balance