The account balances of Pacilio Security Services, Incorporated as of January $1,$ Year $9,$ are shown here:Cash$ $93,380$Petty cash$100$Accounts receivable$21,390$Allowance for doubtful accounts$2,485$Supplies$180$Prepaid rent$3,000$Merchandise inventory $(23$ @ $$280)6,440$Equipment$9,000$Van$27,000$Accumulated depreciation$14,900$Salaries payable$1,500$Common stock$50,000$Retained earnings$91,605$During Year $9,$ Pacilio Security Services experienced the following transactions:Paid the salaries payable from Year $8.$Paid $$9,000$ on May $2,$ Year $9,$ for one years office rent in advance.Purchased $$425$ of supplies on account.Purchased $145$ alarm systems at a cost of $$290$ each. Paid cash for the purchase..After numerous attempts to collect from customers, wrote off $$2,060$ of uncollectible accounts receivable.Sold $130$ alarm systems for $$580$ each plus sales tax of $5$ percent. All sales were on account.Compute and record the cost of goods sold using the FIFO cost$-$flow method for the sale in transaction $6.$Billed $$107,000$ of monitoring services for the year. Credit card sales amounted to $$42,000,$ and the credit card company charged a $4$ percent fee. The remaining $$65,000$ were sales on account. Sales tax is not charged on this service.Replenished the petty cash fund on June $30.$ The fund had $$5$ cash and has receipts of $$60$ for yard mowing, $$15$ for office supplies expense, and $$17$ for miscellaneous expenses.Collected the amount due from the credit card company.Paid the sales tax collected on $$69,600$ of the alarm sales.Paid installers and other employees a total of $$65,000$ for salaries for the year. Assume the Social Security tax rate is $6$ percent and the Medicare tax rate is $1\mathrm{.}5$ percent. Federal income taxes withheld amounted to $$7,500.$ Cash was paid for the net amount of salaries due.Pacilio now offers a one$-$year warranty on its alarm systems. Paid $$1,950$ in warranty repairs during the year.On September $1,$ borrowed $$12,000$ from State Bank. The note had an $8$ percent interest rate and a one$-$year term to maturity.Collected $$136,100$ of accounts receivable during the year.Paid $$15,000$ of advertising expense during the year.Paid $$7,200$ of utilities expense for the year.Paid the payroll taxes, both the amounts withheld from the salaries plus the employer share of Social Security tax and Medicare tax, on $$60,000$ of the salaries plus $$7,000$ of the federal income tax that was withheld. $($Unemployment taxes were not paid at this time.$)$Paid the accounts payable.Paid a dividend of $$10,000$ to the shareholders.AdjustmentsThere was $$165$ of supplies on hand at the end of the year.Recognized the expired rent for the office building for the year.Recognized uncollectible accounts expense for the year using the allowance method. The company revised its estimate of uncollectible accounts based on prior years experience. This year, Pacilio estimates that $2\mathrm{.}75$ percent of sales on account will not be collected.Recognized depreciation expense on the equipment and the van. The equipment has a five$-$year life and a $$2,000$ salvage value. The van has a four$-$year life and a $$6,000$ salvage value. The company uses double$-$declining$-$balance for the van and straight$-$line for the equipment. $($A full years depreciation was taken in Year $8,$ the year of acquisition.$)$The alarm systems sold in transaction $6$ were covered with a one$-$year warranty. Pacilio estimated that the warranty cost would be $3$ percent of alarm sales.Recognized the accrued interest on the note payable at December $31,$ Year $9.$The unemployment tax on salaries has not been paid. Recorded the accrued unemployment tax on the salaries for the year. The unemployment tax rate is $4\mathrm{.}5$ percent. $($$$14,000$ of salaries is subject to this tax.$)$Recognized the employer Social Security and Medicare payroll tax that has not been paid on $$5,000$ of salaries expense.edger Project i

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Pacilio Security Services, Incorporated

Effect of Transactions on Financial Statements $-$ Year $9$

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