Create a Balance Sheet Indicate whether each  (1-19 and 1-4) transaction increases (+), decreases (–), or increases and decreases (+/-) for each element of the financial statements (balance sheet [assets, liabilities, stockholders equity], income statement [revenue, expenses], cash flow statement). Also, in the Cash Flow column, use the letters OA to designate operating activity, IA for investing activity, FA for financing activity.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

The trial balance of Pacilio Security Services, Incorporated as of January 1, Year 7, had the following normal balances:
 

Cash $ 78,972
Petty Cash 100
Accounts Receivable 33,440
Supplies 160
Prepaid Rent 3,200
Merchandise Inventory (23 @ $280) 6,440
Land 4,000
Accounts Payable 250
Salaries Payable 1,400
Common Stock 50,000
Retained Earnings 74,662

 
During Year 7, Pacilio Security Services experienced the following transactions:

  1. Paid the salaries payable from Year 6.
  2. Paid $4,800 on March 1, Year 7, for one year’s lease in advance on the company van.
  3. Paid $8,400 on May 2, Year 7, for one year’s office rent in advance.
  4. Purchased $550 of supplies on account.
  5. Paid cash to purchase 105 alarm systems at a cost of $285 each.
  6. Pacilio has noticed its accounts receivable balance is growing more than desired and some collection problems exist. It appears that uncollectible accounts expense is approximately 3 percent of total credit sales. Pacilio has decided it will, starting this year, adopt the allowance method of accounting for uncollectible accounts. It will record an adjusting entry to recognize the estimate at the end of the year.
  7. In trying to collect several of its delinquent accounts, Pacilio has learned that these customers have either declared bankruptcy or moved and left no forwarding address. These uncollectible accounts amount to $1,900.
  8. Sold 110 alarm systems for $63,800. All sales were on account.
  9. Record the cost of goods sold related to the sale from Event 8 using the FIFO method.
  10. Paid the balance of the accounts payable.
  11. Pacilio began accepting credit cards for some of its monitoring service sales. The credit card company charges a fee of 4 percent. Total monitoring services for the year were $68,000. Pacilio accepted credit cards for $24,000 of this amount. The other $44,000 was sales on account.
  12. On July 1, Year 7, Pacilio replenished the petty cash fund. The fund contained $21 of currency and receipts of $50 for yard mowing, $22 for office supplies expense, and $9 for miscellaneous expenses.
  13. Collected the amount due from the credit card company.
  14. Paid installers and other employees a total of $45,000 cash for salaries.
  15. Collected $116,800 of accounts receivable during the year.
  16. Paid $9,500 of advertising expense during the year.
  17. Paid $5,200 of utilities expense for the year.
  18. Paid a dividend of $20,000 to the shareholders.

Adjustments

  1. There was $250 of supplies on hand at the end of the year.
  2. Recognized the expired rent for both the van and the office for the year.
  3. Recognized the uncollectible accounts expense for the year using the allowance method.
  4. Accrued salaries at December 31, Year 7, were $2,100.

Create a Balance Sheet

Indicate whether each  (1-19 and 1-4) transaction increases (+), decreases (–), or increases and decreases (+/-) for each element of the financial statements (balance sheet [assets, liabilities, stockholders equity], income statement [revenue, expenses], cash flow statement). Also, in the Cash Flow column, use the letters OA to designate operating activity, IA for investing activity, FA for financing activity. 

Expert Solution
steps

Step by step

Solved in 3 steps with 1 images

Blurred answer
Knowledge Booster
Basic Accounting Terms
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education