BF140 Business Financial Concepts: Project 2
Accounting for Accruals and Deferrals
Project Description:
The trial balance of Pacilio Security Services, Inc. as of January 1, Year 1, was as follows:
Cash $8,500
Land $4,000
Notes Payable $5,000
Common Stock $6,000
Retained Earnings $1,500
During Year 1, Pacilio Security Services experienced the following transactions:
1. Acquired an additional $2,000 from the issue of common stock.
2. Paid $3,000 on the debt owed to the Small Business Government Agency. The loan is interest-free.
3. Performed $21,000 of security services for numerous local events during the year; $15,000 was on account and $6,000 was cash.
4. On May 1, rented a small office building. Paid $2,400 for 12 months’ rent in advance.
5. Purchased supplies on account for $650.
6. Paid salaries expense for the year of $8,000.
7. Incurred other operating expenses on account, $6,200.
8. On September 1, Year 1, a customer paid $600 for services to be provided over the next six months.
9. Collected $13,500 of accounts receivable during the year.
10. Paid $5,800 on accounts payable.
11. Paid $1,500 of advertising expenses for the year.
12. Paid a cash dividend to the shareholders of $1,000.
13. The market value of the land was determined to be $5,000 at December 31, Year 1.
Information for Adjustments
14. There was $65 of supplies on hand at the end of the year.
15. Recognized the expired rent.
16. Recognized the revenue earned from Transaction 8.
17. Accrued salaries were $1,200 at December 31, Year 1.
A. Record the above transactions in an accounting equation. Provide the appropriate account titles for the amounts shown in the Retained Earnings column.
Notes:
1. For the examples, see Chapter 1 p. 16; Chapter 2 p. 75, p. 81, p. 85, p. 86.
2. Use the following format to record the transactions (the first transaction is recorded).
Pacilio Security Services, Inc.
Event Cash + Acct.
Rec. + Supp. + Pp.
Rent + Land = Accts.
Pay + Sal.
Pay. + Unear.
Rev. + Notes
Pay. + Com. Stock + Ret. Earn. Acct.
Titles
B. Bal. 8,500 + NA + NA + NA + 4,000 = NA + NA + NA + 5,000 + 6,000 + 1,500
B. Prepare the following for Year 1:
• income statement
• statement of changes in stockholders’ equity
• balance sheet
• and statement of cash flows
Note: See Chapter 1 pp. 21-27, Chapter 2 pp. 76-79, pp. 88-92.
Submit your work to Project 2 in Moodle.
FOR INSTRUCTOR USE ONLY
Grading Rubric
Grading accepts a start value of 100. Points will be deducted for failure to fully complete or meet the stated requirements. 90-100 = Represents work of superior quality (A); 80-89 = Represents work of good to very good quality (B); 70-79 = Represents adequate command of class content (C); 69 and below = Represents work that shows a need for development or improvement (F); 0 = Represents plagiarized work (F).
BF140: Business Financial Concepts (BCF)
Student:
Instructor:
Date:
Project 2
Description of requirements Possible Points Your Points
A. Record the above transactions in an accounting equation. Provide the appropriate account titles for the amounts shown in the Retained Earnings column. 50
B. Prepare the following for Year 1:
• income statement
10
• statement of changes in stockholders’ equity 10
• balance sheet 10
• and statement of cash flows 10
Assignment was submitted by due date 10
TOTAL 100
YOUR SCORE: ________
Instructor Comments:
