70.2K

Verified Solution

Link Copied!

need help with the analysis only

The trial balance of Pacilio Security Services, Inc. as of January $1,$ Year $11,$ had the following normal balances.

Cash $ $113,718$

Petty cash $100$

Accounts receivable $39,390$

Allowance for doubtful accounts $4,662$

Supplies $210$

Merchandise inventory $(48$ @ $$300)14,400$

Equipment $9,000$

Van $27,000$

Building $125,000$

Accumulated depreciation $28,075$

Land $25,000$

Sales tax payable $390$

Employee income tax payable $1,000$

FICA$$Social Security tax payable $840$

FICA$$Medicare tax payable $210$

Warranty payable $918$

Unemployment tax payable $945$

Notes payable$$Building $92,762$

Bonds payable $50,000$

Discount on bonds payable $800$

Common stock $50,000$

Retained earnings $124,816$

During Year $11,$ Pacilio Security Services experienced the following transactions:

Paid the sales tax payable from Year $10.$

Paid the balance of the payroll liabilities due for Year $10($federal income tax, FICA taxes, and unemployment taxes$).$

Issued $5,000$ additional shares of the $$5$ par value common stock for $$8$ per share.

Issued $1,000$ shares of $$50$ stated value, $5$ percent cumulative preferred stock for $$52$ per share.

Purchased $$500$ of supplies on account.

Purchased $190$ alarm systems at a cost of $$310.$ Cash was paid for the purchase.

After numerous attempts to collect from customers, wrote off $$3,670$ of uncollectible accounts receivable.

Sold $210$ alarm systems for $$600$ each plus sales tax of $5$ percent. All sales were on account.

Record the cost of goods sold related to the sale from Event $8$ using the FIFO method.

Billed $$125,000$ of monitoring services for the year. Credit card sales amounted to $$58,000,$ and the credit card company charged a $4$ percent fee. The remaining $$67,000$ were sales on account. Sales tax is not charged on this service.

Replenished the petty cash fund on June $30.$ The fund had $$10$ cash and receipts of $$75$ for yard mowing and $$15$ for office supplies expense.

Collected the amount due from the credit card company.

Paid the sales tax collected on $$105,000$ of the alarm sales.

Collected $$198,000$ of accounts receivable during the year.

Paid installers and other employees a total of $$96,000$ for salaries for the year. Assume the Social Security tax rate is $6$ percent and the Medicare tax rate is $1\mathrm{.}5$ percent. Federal income taxes withheld amounted to $$10,600.$ No employee exceeded $$110,000$ in total wages. The net salaries were paid in cash.

On October $1,$ declared a dividend on the preferred stock and a $$1$ per share dividend on the common stock to be paid to shareholders of record on October $15,$ payable on November $1,$ Year $11.$

Paid $$1,625$ in warranty repairs during the year.

On November $1,$ Year $11,$ paid the dividends that had been previously declared.

Paid $$18,500$ of advertising expense during the year.

Paid $$6,100$ of utilities expense for the year.

Paid the payroll liabilities, both the amounts withheld from the salaries plus the employer share of Social Security tax and Medicare tax, on $$88,000$ of the salaries plus $$9,200$ of the federal income tax that was withheld.

Paid the accounts payable.

Paid bond interest and amortized the discount. The bond was issued in Year $10$ and pays interest at $6$ percent.

Paid the annual installment of $$14,238$ on the amortized note. The interest rate for the note is $7$ percent.

Adjustment

There was $$190$ of supplies on hand at the end of the year.

Recognized the uncollectible accounts expense for the year using the allowance method. Pacilio now estimates that $1$ percent of sales on account will not be collected.

Recognized depreciation expense on the equipment, van, and building. The equipment, purchased in Year $8,$ 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 building has a $40-$year life and a $$10,000$ salvage value. The company uses straight$-$line for the equipment and the building. The van is fully depreciated.

The alarm systems sold in transaction $8$ were covered with a one$-$year warranty. Pacilio estimated that the warranty cost would be $2$ percent of alarm sales.

The unemployment tax on the three employees has not been paid. Record the accrued unemployment tax on the salaries for the year. The unemployment tax rate is $4\mathrm{.}5$ percent and gross wages for all three employees exceeded $$7,000.$

Recognized the employer Social Security and Medicare payroll tax that has not been paid on $$8,000$ of salaries expense.

Indicate whether the transaction increases $(+),$ decreases $(),$ or increases and decreases $(+/-)$ for each element of the financial statements. Also, in the Cash Flow column, use the letters OA to designate operating activity, IA for investing activity, FA for financing activity. When more than one activity can be correct response, select from options $"$FA or IA$","$IA or OA$","$OA or FA$.$ The first transaction is recorded as an example.

Answer & Explanation Solved by verified expert

See Answer