Accounts- COMPREHENSIVE PROBLEM………….. 1 answer below »

Accounts- COMPREHENSIVE PROBLEM………….. 1 answer below »

COMPREHENSIVE PROBLEM–2015 In 2014, Pacilio Security Services decided to expand its business to sell security systems and offer 24-hour alarm monitoring services. It plans to phase out its current service of providing security personnel at various events. The trial balance of Pacilio Security Services Inc. as of January 1, 2015, had the following normal balances: Cash $63,860 Accounts Receivable $20,500 Supplies $250 Prepaid Rent $2,000 Merchandise Inventory (10 @ 216) $2,160 Land $4,000 Accounts Payable $1,080 Salaries Payable $2,500 Common Stock $50,000 Retained Earnings $39,190 $92,770 $92,770 During 2015, Pacilio Security Services experienced the following transactions: 1. Paid the salaries payable from 2014 on January 3, 2015. 2. On January 15, purchased 20 standard alarm systems for cash at a cost of $250 each. 3. On February 1, paid the accounts payable of $980, but not within the discount period. (The company uses the gross method.) 4. On March 1, leased a business van. Paid $4,800 for one year’s lease in advance. 5. Paid $7,200 on May 1 for one year’s rent on the office in advance. 6. On May 15, purchased with cash $500 of supplies to be used over the next several months by the business. 7. Purchased with cash another 25 alarm systems on May 20 for resale at a cost of $260 each. 8. On May 30, purchased on account 30 standard alarm systems at a cost of $265. 9. On June 1, installed 60 standard alarm systems for $33,000. $22,000 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. On June 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. On July 10, paid installers and other employees a total of $21,000 cash for salaries. 12. On August 5, sold $45,000 of monitoring services on account. 13. On October 1, sold an additional monitoring service for $1,200 for one year’s service. The customer paid the full amount of $1,200 on October 1. 14. On October 20, collected $74,000 of accounts receivable during the year. 15. On November 15, paid an additional $6,000 to settle some of the accounts payable. 16. On November 30, paid $3,500 of advertising expense during the year. 17. On November 30, paid $2,320 of utilities expense for the year. 18. Paid a dividend of $15,000 to the shareholders. 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. Record two entries—one for each adjustment. 21. Recognized the revenue earned from October 1, transaction 13. 22. Accrued salaries at December 31, 2015, were $1,000. Required a. Record the above transactions in general journal form. b. Post the transactions to T-accounts. Make sure to record the beginning balance in the T accounts. c. Prepare a trial balance. d. Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows. e. Record the journal entries to close the temporary accounts to retained earnings. f. Post the closing entries to the T-accounts and prepare an after-closing trial balance. COMPREHENSIVE PROBLEM–2016 During 2016 Pacilio Security Services experienced the following transactions: 1. On January 5, 2016, Paid the salaries payable from 2015. 2. Paid $4,800 on March 1, 2016, for one year’s lease on the company van in advance. 3. Paid $7,200 on May 2, 2016, for one year’s office rent in advance. 4. On May 30, purchased $400 of supplies on account. 5. On June 1, purchased 100 alarm systems for $28,000 cash during the year. 6. On June 12, sold 102 alarm systems for $57,120. All sales were on account. (Compute cost of goods sold using the FIFO cost flow method.) 7. On June 30, paid $2,100 on accounts payable during the year. 8. On August 25, billed $52,000 of monitoring services for the year. 9. On August 30, paid installers and other employees a total of $25,000 cash for salaries. 10. On September 30, collected $89,300 of accounts receivable during the year. 11. On October, 31, paid $3,600 of advertising expense during the year. 12. On November 30, paid $2,500 of utilities expense for the year. 13. On December 31, paid a dividend of $10,000 to the shareholders. Adjustments 16. There was $260 of supplies on hand at the end of the year. 17. Recognized the expired rent for both the van and the office building for the year. (The rent for both the van and the office remained the same for 2015 and 2016.) 18. Recognized the balance of the revenue earned in 2016 where cash had been collected in 2015. (See Unearned revenue account) 19. Accrued salaries at December 31, 2016, were $1,400. Required a. Record the above transactions in general journal form. b. Post the transactions to the T-accounts. c. Prepare a bank reconciliation at the end of the year. The following information is available for the bank reconciliation: 1. Checks written but not paid by the bank, $8,350. 2. A deposit of $6,500 made on December 31, 2016, had been recorded but was not shown on the bank statement. 3. A debit memo for $55 for a new supply of checks. (Hint: Use Office Supplies Expense account.) 4. A credit memo for $30 for interest earned on the checking account. 5. An NSF check for $120. 6. The balance shown on the bank statement was $81,015. d. Record and post any adjustments necessary from the bank reconciliation. e. Prepare a trial balance. f. Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows. g. Close the temporary accounts to retained earnings. h. Post the closing entries to the T-accounts and prepare a post-closing trial balance.

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