The trial balance of Pacilio Security Srvices Inc. as of January 1, 2021, had the following normal balances:
The trial balance of Pacilio Security Services Inc. as of January 1, 2021, had the following normal balances: Cash Petty cash Accounts receivable Allowance for doubtful accounts Supplies Merchandise inventory (48 @ $300) Equipment Van Building Accumulated depreciation Land Sales tax payable Employee income tax payable FICA-Social Security tax payable FICA-Medicare tax payable Warranty payable Unemployment tax payable Notes payable-Building Bonds payable Discount on bonds payable Common stock Retained earnings $113,718 100 39,390 4,662 210 14,400 9,000 27.000 125,000 28,075 25,000 390 1,000 840 210 918 945 92,762 50,000 800 50,000 124,816 1 During 2021, Pacilio Security Services experienced the following transactions: 1. Paid the sales tax payable from 2020 2. Paid the balance of the payroll liabilities due for 2020 (federal income tax, FICA taxes, and unemployment taxes). 3. Issued 5,000 additional shares of the $5 par value common stock for $8 per share and 1.000 shares of $50 stated valve, 5 percent cumulative preferred stock for 55 per share. 4 Purchased $500 of supplies on account. 5. Purchased 190 alarm systems at a cost of $310. Cash was paid for the purchase 6. After numerous attempts to collect from customers, wrote off $3,670 of uncollectible accounts receivable. 7. Sold 210 alarm systems for $600 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.) 8 Billed $125,000 of monitoring services for the year. Credit card sales amounted to $58,000, and the credit card company charged a 4 percent fee. The remaining 567,000 were sales on account. Sales tax is not charged on this service 9. Replenished the petty cash fund on June 30. The fund had $10 cash and receipts of $75 for yard mowing and $15 for office supplies expense. 10. Established a budget plan for the purchase of machinery to be used for future production. 11. Collected the amount due from the credit card company 12. Paid the sales tax collected on $105,000 of the alarm sales 12. Collected $198.000 of accounts receivable during the year 14. Paid installers and other employees a total of 596,000 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 $10,600 No employee exceeded $110.000 in total wages. The net salaries were paid in cas. 15 Hired a senior accountant for the Finance Department with the annual salary $120,000. The commencement of employment will be lanuary, 2022. 16 On October 1, declared a dividend on the preferred stock and a $1 per share dividend on the common stock to be paid to shareholders of record on October 15, payable on November 1, 2021 17. Paid $1,625 in warranty repairs during the year. 18. On November 1, 2021, paid the dividends that had been previously declared. 19. Paid S18.500 of advertising expense during the year 20. Paid $6,100 of the expense for the year. 21. Paid 59,700 of the Employee Income Tax Payable, 55.280 of the FICA Tax - 5oc. Sec. Tax Payable and $1,220 the PICA Tax Medicare Taswable. Also, paid the Payroll To Dipense for the employer matching of FICA taxes on 5,000 of salaries 22. Pald the accounts payable 23 Pad the annual bond interest and amortized the discount using the trainemethod. The bond was issued Dec 31 in 2020 A and pays interest anal rate of 6 percent. The bond will mature on December 31, 2025 24. Paid the annual installment of $14,23on the amortized note. The interest rate for the note a 7 percent Adjustment 25. There was $190 of supplies on hand at the end of the year 26 Mecognised the uncollectible accounts expense for the years the allowance method. Paillanwestes that percent of the count will not be collected 27. Recognized deprecation pense on the equipment, var, and building. The equipment, purchased in 2018 has a five year we and a $2,000 salvape vie Theats for a $6.000 salvage value. The 23 Paid the annual bond interest and amortized the discount using the straight-line method. The band was issued Dec 31 in 2020 at 98.4 and pays interest at an annual rate of 6 percent. The bond will mature on December 31, 2025. 24. Paid the annual installment of $14,238 on the amortized note. The interest rate for the note is 7 percent. Adjustment 25. There was $190 of supplies on hand at the end of the year. 26. Recognized the uncollectible accounts expense for the year using the allowance method. Pacilio now estimates that 1 percent of sales on account will not be collected. 27. Recognized depreciation expense on the equipment, van, and building. The equipment, purchased in 2018, 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 building has a 40-year life and a $10,000 salvage value. The company uses straight-line for the equipment and the building. The van is fully depreciated. 28. The alarm systems sold in transaction 7 were covered with a one-year warranty. Pacilio estimated that the warranty cost would be 2 percent of alarm sales. 29. The unemployment tax on the three employees has not been paid. Record the accrued unemployment tax on the salaries for the year. The unemployment tax rate is 4.5 percent and gross wages for all three employees exceeded $7,000 30. Recognized the employer Social Security and Medicare payroll tax that has not been paid on $8,000 of salaries expense REQUIREMENTS Using the template provided, prepare the journal entries to record transactions (1) through (24). Then prepare the necessary adjusting entries (25) through (30) to correctly report net income for the period. if no entry is required for a transaction, indicate "No journal entry required or N/A" in the journal entry line. Do worry about transaction dates in this project. List these journal entries including adjusting entries by the transaction number. Then close books by posting closing entries. For journal entries, credit is granted based on the accuracy of the amount posted, and the choice of debit or credit and the account name used for each transaction Prepare the balance sheet as of Dec 31, 2021, the retained earnings statement and the multi-step Income statement for the period ending December 31, 2021. Each financial statement should include the proper heading, Credit will be given to the correctness of headings, the name of each line items, the structure of each financial statement, and the amount
