Answer full question. ## Financial Transactions of Pacillo Security Services, Inc. for Year 6### Opening Balances as of January 1, Year 6**Assets:**- **Cash:** $74,210- **Accounts Receivable:** $13,500- **Supplies:** $200- **Prepaid Rent:** $3,200- **Merchandise Inventory:** $6,620 (24 @ $265; 1 @ $260)- **Land:** $4,000**Liabilities:**- **Accounts Payable:** $1,950- **Unearned Revenue:** $900- **Salaries Payable:** $1,000**Equity:**- **Common Stock:** $50,000- **Retained Earnings:** $47,880### Transactions During Year 61. **Paid the salaries payable from Year 5.**2. **Established a petty cash fund:** On March 1, Year 6, a $100 petty cash fund was established for small expenditures.3. **Paid for van insurance:** $4,800 on March 1, Year 6, for a one-year policy.4. **Prepaid rent:** $7,200 on May 2, Year 6, for one year's office rent.5. **Supplies purchased:** $400 worth of supplies.6. **Alarm systems purchased:** Bought 100 alarm systems for $28,000 in cash during the year.7. **Sold alarm systems:** 102 alarm systems sold 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 method.9. **Advertising expense paid:** $2,100 in cash during the year.10. **Replenished petty cash fund:** On August 1, the petty cash fund was replenished, leaving $7 in currency. The receipts included: - Office Supplies Expense: $23 - Cutting Grass: $55 - Miscellaneous Expense: $1411. **Monitoring services billed:** $52,000 billed for the year.12. **Salaries paid:** Paid $25,000 in cash to installers and other employees.13. **Collected receivables:** Collected $89,300 from accounts receivable.14. **Advertising expense recorded:** $3,600 incurred # Statement of Cash Flow Example### IntroductionIn this example, we will guide you on how to complete a statement of cash flows for Pacillo Security Services, Inc. for the year ending December 31, Year 6. This will include cash flows from operating, investing, and financing activities.## Statement of Cash Flows**Pacillo Security Services, Inc.** **Statement of Cash Flows** **For the Year Ended December 31, Year 6** | Cash flows from operating activities: | | ||-------------------------------------------------------------|--------------|---------------|| Net income | | || Adjustments to reconcile net income to net cash | | || provided by operating activities | | || [List all adjustments here] | | || | | || Cash provided (used) by operating activities | | || Net cash flow from operating activities | **$** | **0** || Cash flows from investing activities: | | ||-------------------------------------------------------------|--------------|---------------|| [List cash flows from investing activities] | | || | | || Net cash flow from investing activities | **$** | **0** || Cash flows from financing activities: | | ||-------------------------------------------------------------|--------------|---------------|| [List cash flows from financing activities] | | || | | || Net cash flow from financing activities | **$** | **0** || Ending Cash Balance (including petty cash) | **$** | |## Detailed Explanation### Explanation of Each Section:1. **Cash flows from operating activities**: - This section reports the cash generated or used by the normal operations of the business. - It typically includes cash receipts from sales of goods and services, cash payments to suppliers and employees, and other expenditures related to operating activities.2. **Cash flows from investing activities**: - This section includes purchases and sales of long-term assets and other investments that aren't considered cash equivalents. - Example entries could include purchases of new equipment or proceeds from selling an old machinery.3. **Cash flows from financing activities**: - Financing activities include changes in the size and composition of the equity capital and borrowings of

Cash flow statement can be defined as a financial statement which reports the change in the balance…

The trial balance of Pacillo Security Services, Inc. as of January 1, Year 6, had the following normal balances: Cash Accounts Receivable Supplies Prepaid Rent Merchandise Inventory (24 @ $265; $74,210 13,500 200 3,200 6,620 4,000 1,950 900 1,000 50,000 47,880 @ $260) Land Accounts Payable Unearned Revenue Salaries Payable Common Stock Retained Earnings 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 compeny 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. B. Record the cost of goods sold related to the sale from Event 7 using the FIFO method. e. Paid $2,100 on accounts payable during the year. D. 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. 1. Billed $52,000 of monitoring services for the year. 2. Paid installers and other employees a total of $25,000 cash for salaries. B. Collected $89,300 of accounts receivable during the year. a. Paid $3,600 of advertising expense during the year. 5. Paid $2,500 of utilities expense for the year. 5. Paid a dividend of $10,000 to the shareholders. Adjustment . There was $160 of supplies on hand at the end of the year. E. 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 Year 5 and Year 6.)

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q