a Prepare the journal entries to record transactions (1) through (20). Then prepare the necessary adjusting entries (21) through (28) to correctly report net income for the period. Then record the closing entries (29) through (31) as of December 31, Year 9. (If no entry is required for a transaction, select "No journal entry required" in the first account field. Round your answer to the nearest dollar amount.) b Prepare a balance sheet (The balance sheet is the accounting equations: Assets = Liabilities + Equity. Each asset and liability account is reported separately on the balance sheet. Choose the appropriate accounts to be reported on the balance sheet. The unadjusted, adjusted, or post-closing balances will appear for each account, based on your selection. (Enter the balance sheet items in the order of liquidity.) c Prepare an income statement (Choose the appropriate accounts to be reported on income statement. The unadjusted, adjusted, or post-closing balance will appear for each account
The
Cash $ 93,380
Petty cash 100
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
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 year’s 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
Record cost of good sold for the sales transaction mentioned in previous transaction (number 6). Be sure to compute cost of goods sold using the FIFO cost flow method
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 1.5 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. (
Paid the accounts payable
Paid a dividend of $10,000 to the shareholders
Adjustments
There 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 2.75 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 year’s 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 4.5 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
required
a Prepare the journal entries to record transactions (1) through (20). Then prepare the necessary
b Prepare a
c Prepare an income statement (Choose the appropriate accounts to be reported on income statement. The unadjusted, adjusted, or post-closing balance will appear for each account
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