Answer full question. ### Pacilio Security Services, Inc.: Year 3 Financial Overview#### Trial Balance as of January 1, Year 3The following are the normal balances for Pacilio Security Services, Inc. at the beginning of Year 3:- **Cash**: $8,900- **Accounts Receivable**: $1,500- **Supplies**: $65- **Prepaid Rent**: $0- **Land**: $4,800- **Accounts Payable**: $1,500- **Unearned Revenue**: $200- **Salaries Payable**: $1,100- **Notes Payable**: $2,000- **Common Stock**: $8,000- **Retained Earnings**: $2,815#### Transactions During Year 3Throughout Year 3, Pacilio Security Services conducted several key transactions, including:1. **Payment of salaries**: - **Action**: Paid the salaries payable from Year 2.2. **Debt payment**: - **Action**: Paid the balance of $2,000 on the debt to the Small Business Government Agency. Note: The loan is interest-free.3. **Service revenue**: - **Action**: Performed $32,000 of security services for local events. - **Details**: $21,000 was on account and $11,000 was for cash.4. **Prepaid rent**: - **Action**: Paid $3,000 for 12 months' rent in advance on May 1.5. **Supplies purchase**: - **Action**: Purchased supplies on account for $700.6. **Salary expenses**: - **Action**: Paid salaries expense for the year amounting to $9,000.7. **Operating expenses**: - **Action**: Incurred other operating expenses on account totaling $4,200.8. **Unearned revenue**: - **Action**: On October 1, Year 3, a customer paid $1,200 for services to be provided over the next 12 months.9. **Accounts receivable**: - **Action**: Collected $19,000 of accounts receivable during the year.10. **Accounts payable**: - **Action**: Paid $5 ### Overview of Financial Statement AnalysisIn this lesson, we will explore the effects of different transactions on financial statements. The provided table will help students indicate whether a transaction increases (+), decreases (−), or both increases and decreases (+/−) various elements of financial statements.### Key Components of the Table#### Financial Statements Sections:1. **Balance Sheet** - **Assets** - **Liabilities** - **Stockholders' Equity (S. Equity)**2. **Income Statement** - **Revenue** - **Expenses** - **Net Income (Revenue - Expenses)**3. **Statement of Cash Flows** - Indicate activity with "OA" for Operating Activity, "IA" for Investing Activity, and "FA" for Financing Activity### Table Structure#### Example TransactionThe first transaction in the table demonstrates the expected format for recording the effects. In this example:- All elements remain unchanged, denoted by a “−”.- The cash flow activity is labeled as Operating Activity (OA).#### Data Entry ColumnsFor each transaction, columns are provided to mark changes (+, −, +/−) in:- **Assets**- **Liabilities**- **Stockholders' Equity**- **Revenue**- **Expenses**- **Net Income**Additionally, for the Statement of Cash Flows, the specific type of activity (OA, IA, FA) should be indicated.### Detailed Explanation of Table ColumnsThe table is arranged horizontally with seventeen rows, each representing a distinct transaction. Six main columns are aligned vertically, each subdivided into various elements of the financial statements and cash flows:- **1. Transaction**: Numbered from 1 to 17.- **2. Assets**: Indicate the change in assets.- **3. Liabilities**: Indicate the change in liabilities.- **4. Stockholders’ Equity**: Change in stockholders' equity.- **5. Income Statement** - **5a. Revenue** - **5b. Expenses** - **5c. Net Income** (Revenue - Expenses)- **6. Statement of Cash Flows**: Indicate OA, IA, or FA based on the nature of the activity.This systematic approach helps in analyzing and understanding how each transaction impacts the financial health of Pacilio Security Services, Inc. during Year 3.### Practical Usage- **Educational Purpose**

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The trial balance of Pacilio Security Services, Inc, as of January 1, Year 3, had the following normal balances: $৪, 908 1,500 65 800 Cash Accounts Receivable Supplies Prepaid Rent Land 4,000 1,050 200 Accounts Payable Unearned Revenue Salaries Payable Notes Payable Common Stock Retained Earnings 1,200 2,000 8,000 2,815 During Year 3, Pacilio Security Services experienced the following transactions: 1. Paid the salaries payable from Year 2. 2. Paid the balance of $2,000 on the debt owed to the Small Business Government Agency. The loan is interest-free. 3. Performed $32,000 of security services for numerous local events during the year; $21,000 was on account and $11,000 was for cash. 4. On May 1, paid $3,000 for 12 months' rent in advance. 5. Purchased supplies on account for $700. 6. Paid salarles expense for the year of $9,000. 7. Incurred other operating expenses on account, $4,200. 8. On October 1, Year 3, a customer paid $1,200 for services to be provided over the next 12 months. 9. Collected $19,000 of accounts receivable during the year. 0. Paid $5,950 on accounts payable. 11. Paid $1,800 of advertising expenses for the year. 12. Paid a cash dividend to the shareholders of $4,650. 13. The market value of the land was determined to be $5,500 at December 31, Year 3. Adjustments 14. There was $120 of supplies on hand at the end of the year. 15. Recognized the expired rent. 16. Recognized the earned revenue from Year 2 and transaction no. 8. 17. Accrued salaries were $1,000 at December 31, Year 3.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q