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The trial balance of Pacilio Security Services, Inc. as of January 1, Year 10, had the following normal balances: Cash Petty cash Accounts Receivable Allowance for doubtful accounts Supplies Prepaid rent Merchandise inventory (38 e $290) Equipment Van Accumulated depreciation Sales tax payable Employee income tax payable PICA-Social Security tax payable PICA-Medicare tax payable Warranty payable Unemployment tax payable Interest payable Notes payable Common stock Retained earnings $122,475 100 27,400 4,390 165 3,000 11,020 9,000 27,000 23,050 290 500 600 150 312 630 320 12,000 50,000 107.910 During Year 10, Pacilio Security Services experienced the following transactions: 1. Paid the sales tax payable from Year 9. 2. Paid the balance of the payroll liabilities due for Year 9 (federal income tax, FICA taxes, and unemployment taxes) 3. On January 1, Year 10. purchased land and a building for $150,000. The building was appraised at $125,000 and the land at $25,000. Pacilio paid $50,000 cash and financed the balance. The balance was financed with a 10-year installment note. The note had an interest rate of 7 percent and annual payments of $14,238 due on the last day of the year. 4. On January 1, Year 10, issued $50,000 of 6 percent, five year bonds. The bonds were issued at 98. 5. Purchase $660 of supplies on account. 6. Purchased 170 alarm systems at a cost of $300. Cash was paid for the purchase. 7. After numerous attempts to collect from customers, wrote off $2,450 of uncollectible accounts receivable, 8. Sold 160 alarm systems for $580 each plus sales tax of 5 percent. All sales were on account. NEW 9. Record the cost of goods sold related to the sale from Event 8 using the FIFO method. 10. Billed $120,000 of monitoring services for the year. Credit card sales amounted to $36,000, and the credit card company charged a 4 percent fee. The remaining $84.000 were sales on account Sales tax is not charged on this service. 11. Replenished the petty cash fund on June 30. The fund had $11 cash and receipts of $65 for yard mowing and $24 for office supplies expense. 12. Collected the amount due from the credit card company 13. Paid the sales tax collected on $85,000 of the alarm sales. 14. Collected $167.000 of accounts receivable during the year. 15. Paid installers and other employees a total of $82,000 for salaries for the year. Assume the Social Security tax rate is 6 percent and the Medicare tax rate is 1.5 percent. Federal income taxes withheld amounted to $9.500. The net amount of salaries was paid in cash, 16. Paid $1,250 in warranty repairs during the year. 17. On September 1, paid the note and interest owed to State Bank 18. Paid $18,000 of advertising expense during the year. 19. Pald $5,600 of utilities expense for the year 20. Paid $8,600 of the Employee Income Tax Payable. $4,500 of the FICA Tax - Soc. Sec. Tax Payable and $1.125 of the FICA Tax - Medicare Tax Payable. Also, paid the Payroll Tax Expense for the 7.5% employer matching of FICA taxes on $75,000 of salaries. 21. Paid the accounts payable. 22. Paid bond interest and amortized the discount 23. Paid the annual installment on the amortized note. 24. Paid a dividend of $10,000 to the shareholders. Adjustments 25. There was $210 of supplies on hand at the end of the year. 26. Recognized the expired rent for the office building for the year. 27. Recognized the uncollectible accounts expense for the year using the allowance method. Pacillo now estimates that 1.5 percent of sales on account will not be collected 28. Recognized depreciation expense on the equipment, van, and building. The equipment has a 5-year life and a $2,000 salvage value. The van has a 4-year life and a $6,000 salvage value. The building has a 40-year life and a $10,000 salvage value. The company uses double-declining-balance for the van and straight-line for the equipment and the building. The equipment and van were purchased in Year B and a full year of depreciation was taken for both in Year 8. 29. The alarms 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 30. 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 4.5 percent and gross wages for all employees exceeded $7,000. 31. Recognized the employer Social Security and Medicare payroll tax that has not been paid on $7,000 of salaries expense. Answer is not complete. Post-closing Pacilio Security Services, Inc. Balance Sheet At December 31, Year 10 Assets 0 0 $ 0 Liabilities 0 Stockholders' Equity 0

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