Chapter 11 Comprehensive Problem The trial balance of Pacilio Security Services, Inc. as of January 1, Year 11, had the following normal balances: Cash Petty cash Accounts receivable Allowance for doubtful accounts Supplies Merchandise inventory (48 @ $380) 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 $113,718 180 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 CH During Year 11, Pacilio Security Services experienced the following transactions: 1. Paid the sales tax payable from Year 10 2. Paid the balance of the payroll liabilities due for Year 10 (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 4 Issued 1,000 shares of $50 stated value. 5 percent cumulative preferred stock for $52 per share. 5. Purchased $500 of supplies on account 6. Purchased 190 alarm systems at a cost of $310. Cash was paid for the purchase. 7. After numerous attempts to collect from customers, wrote off $3,670 of uncollectible accounts receivable. 8. Sold 210 alarm systems for $600 each plus sales tax of 5 percent. All sales were on account 9. Record the cost of goods sold related to the sale from Event 8 using the FIFO method 10. 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 $67.000 were sales on account Sales tax is not charged on this service 11. 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 12 Collected the amount due from the credit card company 13. Paid the sales tax collected on $105,000 of the alarm sales. 14. Collected $198.000 of accounts receivable during the year. 15. Paid installers and other employees a total of $96,000 for salaries for the year. Assume the Social Security tax rate is 6 percent and the Medicare tax rate is 15 percent Federal income taxes withheld amounted to $10,600. No employee exceeded $110,000 in total wages. The net salaries were paid in cash 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, Year 11 17. Paid $1625 in warranty repairs during the year 18. On November 1. Year 11, paid the dividends that had been previously declared 19. Paid $18.500 of advertising expense during the year 20. Paid $6,100 of utilities expense for the year. 21. Paid $9.200 of the Employee Income Tax Payable, $5,280 of the FICA Tax - Soc Sec Tax Payable and $1,320 of the FICA Tax - Medicare Tax Payable Also, paid the Payroll Tax Expense for the 75% employer matching of FICA taxes on $88,000 of salaries, 22. Paid the accounts payable. 23. Paid bond interest and amortized the discount The bond was issued in Year 10 and pays interest at 6 percent 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 Year 8, 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 45 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 Journal entry worksheet 1 26 27 28 29 30 31 32 33 Record the closing entry for the revenue accounts. Note: Enter debits before credits Date General Journal Debit Credit Dec 31 Record entry Clear entry View general journal Record the closing entry for the expense accounts. Note: Enter debits before credits. Date General Journal Debit Credit Dec 31 Record the closing entry for dividends account. Note: Enter debits before credits General Journal Debit Credit Date Dec 31 Record entry Clear entry View general journal
