Journal Entry Workshop: COMPREHENSIVE PROBLEM - CHAPTER 3

The trial balance of Pacilio Security Services, Inc. as of January 1, Year 3, had the
following normal balances:

Account Balance
Cash $8,900
Accounts 1,500
Receivable
Supplies 65
Prepaid Rent 800
Land 4,000
Accounts Payable 1,050
Unearned Revenue 200
Salaries Payable 1,200
Notes Payable 2,000
Common Stock 8,000
Retained Earnings 2,815

During Year 3, Pacilio Security Services experience the following transactions:

1. Paid the salaries payable from Year 2.
2. Paid the balance of $2,000 on the debt owed. 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 salaries 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.
10. 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 (the prepaid rent from the beginning balance and used during
Year 3)
16. Recognized the earned revenue from Year 2 and transaction #8.
17. Accrued salaries of $1,000 at December 31, Year 3.
Required:
a) Record the above transactions in general journal form.
b) Post the transactions to the T-accounts and determine the account balances.
c) Prepare the trial balance.

Extra Credit:
d) Prepare the four financial statements for Year 3.
e) Prepare the closing entries in general journal form and post to the T-accounts.
f) Prepare the post-closing trial balance.
Journal Entry Workshop Worksheets

A.
Pacilio Security Services, Inc.
General Journal, Year 3

Event Account title Debit Credit

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.
 14.

15.

16.

17.

Expired rent paid in Year 2: (Jan – Apr… beg bal)

1
$
Expired rent paid in Year 3: ($3,000 x )
Total expired rent for Year 3 $

Revenue collected in Year 2, but earned in Year 3 (beg bal)

2
$
Revenue collected in Year 3 and earned in Year 3 ($1,200 x )
Total unearned revenue earned in Year 3 $
 B.
Pacilio Security Services, Inc. T-Accounts for Year 3

Assets = Liabilities + Stockholders’ Equity

Cash Accounts Payable Common Stock

Bal. Bal. Bal.

Bal. Retained Earnings

Bal.

Unearned Revenue
Bal. Bal. Dividends

Bal. Bal.
Accounts Receivable
Bal. Security Service Revenue
Salaries Payable
Bal. Bal.
Bal.
Supplies Bal.
Bal. Advertising Expense
Notes Payable
Bal. Bal. Bal.
Bal.
Prepaid Rent Other Operating Expense
Bal.
Bal.
Bal.
Rent Expense
Land
Bal. Bal.

Salaries Expense

Bal.

Supplies Expense

Bal.
COMPREHENSIVE PROBLEM - CHAPTER 3 (cont.)

C.
Pacilio Security Services, Inc.
Trial Balance
December 31, Year 3
Cash
Accounts Receivable

Totals
BONUS… Extra Credit Parts D, E, F
D.
Pacilio Security Services, Inc.
Income Statement
For the Year Ended December 31, Year 3

Pacilio Security Services, Inc.

Statement of Changes in Stockholders’ Equity
For the Year Ended December 31, Year 3
COMPREHENSIVE PROBLEM - CHAPTER 3 (cont.)

Pacilio Security Services, Inc.

Balance Sheet
As of December 31, Year 3
COMPREHENSIVE PROBLEM - CHAPTER 3 (cont.)

Pacilio Security Services, Inc.

Statement of Cash Flows
For the Year Ended December 31, Year 3

Cash Flows From Operating Activities:

Net Cash Flow from Operating Activities

Cash Flows From Investing Activities:
Cash Flows From Financing Activities:

Net Cash Flow from Financing Activities

Net Increase in Cash
Plus: Beginning Cash Balance
Ending Cash Balance
COMPREHENSIVE PROBLEM - CHAPTER 3 (cont.)

E.
Date Account Titles Debit Credit

Closing Entries
Dec. 31

Dec. 31 Retained Earnings (all expenses)

Dec. 31
COMPREHENSIVE PROBLEM - CHAPTER 3 (cont.)

Pacilio Security Services, Inc. T-Accounts for Year 3

Assets = Liabilities + Stockholders’ Equity
Cash Accounts Payable Common Stock
Bal. Bal. - Bal.

Retained Earnings
Accounts Receivable Unearned Revenue Bal.
Bal. Bal.
Bal.

Supplies Dividends
Bal. Salaries Payable Bal.
Bal. Bal. -0-

Prepaid Rent Security Service Revenue

Bal. Bal.
Bal. -0-

Land Advertising Expense

Bal. Bal.
Bal. -0-

Other Operating Expense

Bal.
Bal. -0-

Rent Expense
Bal.
Bal. -0-

Salaries Expense
Bal.
Bal. -0-

Supplies Expense
Bal.
Bal. -0-
COMPREHENSIVE PROBLEM- CHAPTER 3 (cont.)

F.
Pacilio Security Services, Inc.
Post-Closing Trial Balance
December 31, Year 3
Cash
Accounts Receivable

Totals