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The trial balance of Pacilio Security Services, Incorporated as of January 1, Year 5, had the following normal balances. Cash $62,860 Accounts receivable 20,500 Supplies
The trial balance of Pacilio Security Services, Incorporated 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:
- Paid the salaries payable from Year 4.
- On January 15, purchased 20 standard alarm systems for cash at a cost of $250 each.
- On February 1, 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 years lease in advance.
- Paid $7,200 on May 1 for one years rent on the office in advance.
- Purchased with cash $500 of supplies to be used over the next several months by the business.
- Purchased with cash another 25 alarm systems on August 1 for resale at a cost of $260 each.
- On September 5, purchased on account 30 standard alarm systems at a cost of $265.
- Installed 60 standard alarm systems for $33,000. Sales of $22,000 were on account, while $11,000 were cash sales.
- Record the cost of goods sold related to the sale from Event 9 using the perpetual FIFO method.
- 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.
- 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.
- Paid installers and other employees a total of $21,000 cash for salaries.
- Sold $45,000 of monitoring services during the year. The services are billed to the customers each month.
- Sold an additional monitoring service for $1,200 for one years service. The customer paid the full amount of $1,200 on October 1.
- Collected $74,000 of accounts receivable during the year.
- Paid an additional $6,000 to settle some of the accounts payable.
- Paid $3,500 of advertising expense during the year.
- Paid $2,320 of utilities expense for the year.
- Paid a dividend of $15,000 to the shareholders.
Adjustments
- There was $200 of supplies on hand at the end of the year.
- Recognized the expired rent for both the van and the office building for the year.
- Recognized the revenue earned from transaction 15.
- Accrued salaries at December 31, Year 5, were $1,000
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