Answer full question. ### Understanding the Balance SheetThe balance sheet is a fundamental accounting document that represents the financial position of a company at a specific point in time. It follows the accounting equation:**Assets = Liabilities + Equity**Each asset and liability account is individually reported on the balance sheet.### Example of a Balance SheetBelow is an example of an unadjusted balance sheet for Pacilio Security Services, Inc. as of December 31, Year 6.**Balance Sheet**Pacilio Security Services, Inc.At December 31, Year 6#### Assets```(Asset accounts would be listed and detailed here)---------------------------------```#### Liabilities```Liabilities(Liability accounts would be listed and detailed here)---------------------------------```#### Stockholders' Equity```(Stockholders' equity accounts would be detailed here)0```### Explanation of the Diagram1. **Format and Sections:** - The balance sheet is divided into three main sections: Assets, Liabilities, and Stockholders' Equity. 2. **Assets Section:** - This section lists all the assets owned by the company. They are typically listed in order of liquidity, meaning the ease with which they can be converted into cash. 3. **Liabilities Section:** - This section lists all obligations or debts the company owes. Like assets, liabilities are usually listed based on their due dates.4. **Stockholders' Equity Section:** - This section represents the equity portion, which is essentially what the owners of the company actually own after all liabilities are paid off. This can include common stock, retained earnings, etc.### Key Points- **Unadjusted/Adjusted/Post-Closing Balances:** - The balance sheet can display various types of balances based on adjustments and closing processes needed at the end of a financial period. - In this example, the balance sheet shown is unadjusted. - **Precision and Accuracy:** - Each account is reported separately to provide clarity and detailed information about the company's financial standing.Understanding how to read and interpret a balance sheet is crucial for anyone involved in business or finance, as it provides a snapshot of the company's financial health at a specific point in time. **Pacillo Security Services, Inc. - Financial Overview and Transactions****Trial Balance as of January 1, Year 6:**| Account | Amount ($) ||---------------------------|------------|| Cash | 74,210 || Accounts Receivable | 13,500 || Supplies | 2,200 || Prepaid Rent | 3,200 || Merchandise Inventory (24 @ $265; 1 @ $260) | 6,620 || Land | 4,800 || Accounts Payable | 1,950 || Unearned Revenue | 900 || Salaries Payable | 1,000 || Common Stock | 50,800 || Retained Earnings | 47,888 |**Transactions during Year 6:**1. **Paid the salaries payable from Year 5.**2. **Established a petty cash fund** with $100 for small expenditures on March 1, Year 6.3. **Paid $4,800** on March 1, Year 6, for a one-year lease on the company van in advance.4. **Paid $7,200** on May 2, Year 6, for one year's office rent in advance.5. **Purchased $400** of supplies on account during the year.6. **Purchased 100 alarm systems** for $28,000 cash during the year.7. **Sold 102 alarm systems** for $57,120. All sales were on account.8. **Recorded the cost of goods sold related to the sale** from Event 7 using the FIFO (First In, First Out) method.9. **Paid $2,100** on accounts payable during the year.10. **Replenished the petty cash fund** on August 1. At that time, the petty cash fund had only $7 of currency left. It contained the following receipts: office supplies expense, $23; cutting grass, $55; and miscellaneous expense, $14.11. **Billed $52,000** of monitoring services for the year.12. **Paid installers and other employees** a total of $25,000 cash for salaries.13. **Collected $8,300** of accounts receivable during the year.14. **Paid $3,600**

What is meant by a Balance Sheet? A balance sheet shows the financial position of any company. It…

The trial balance of Pacilio Security Services, Inc. as of January 1, Year 6, had the following normal balances: Cash Accounts Receivable Supplies Prepaid Rent Merchandise Inventory (24 @ $265; 1 @ $260) Land Accounts Payable Unearned Revenue Salaries Payable Common Stock Retained Earnings $74,210 13,500 200 3,200 6,620 4,000 1,950 900 1,000 50, e00 47,880 During Year 6, Pacilio Security Services experienced the following transactions: 1. Paid the salaries payable from Year 5. 2. On March 1, Year 6, Pacilio established a $100 petty cash fund to handle small expenditures. 3. Paid $4,800 on March 1, Year 6, for a one-year lease on the company van in advance. 4. Paid $7,200 on May 2, Year 6, for one year's office rent in advance. 5. Purchased $400 of supplies on account. 6. Purchased 100 alarm systems for $28,000 cash during the year. 7. Sold 102 alarm systems for $57,120. All sales were on account. 8. Record the cost of goods sold related to the sale from Event 7 using the FIFO method. 9. Paid $2,100 on accounts payable during the year. 10. Replenished the petty cash fund on August 1. At this time, the petty cash fund had only $7 of currency left. It contained the following receipts: office supplies expense, $23; cutting grass, $55; and miscellaneous expense, $14. 11. Billed $52,000 of monitoring services for the year. 12. Paid installers and other employees a total of $25,000 cash for salaries. 13. Collected $89,300 of accounts receivable during the year. 14. Paid $3,600 of advertising expense during the year. 15. Paid $2,500 of utilities expense for the year. 16. Pald a dividend of $10,000 to the shareholders. Adjustment 17. There was $160 of supplies on hand at the end of the year. 18. Recognized the expired rent for both the van and the office building for the year. (The rent for both the van and the office remaine the same for Year 5 and Year 6.)

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter21: Accounting For Accruals, Deferrals, And Reversing Entries

Section: Chapter Questions

Problem 1ANFS