The trial balance of Fuzzy Security Services Ltd. as of January 1, Year 9, had the following normal balances: Cash $93,380 Petty Cash 100 Accounts receivable 21,390 Allowance for doubtful accounts 2,485 Supplies 180 Prepaid rent 3,000 Merchandise inventory (23 @ $280) 6,440 Equipment 9,000 Van 27,000 Accumulated depreciation 14,900 Salaries payable 1,500 Common stock 50,000 Retained earnings 91,605 During Year 9, Fuzzy Security Services experienced the following transactions: 1. Paid the salaries payable from Year 8. 2. Paid $9,000 on May 2, Year 9, for one year’s office rent in advance. 3. Purchased $425 of supplies on account. 4. Purchased 145 alarm systems at a cost of $290 each. Paid cash for the purchase. 5. After numerous attempts to collect from customers, wrote off $2,060 of uncollectible accounts receivable. 6. Sold 130 alarm systems for $580 each plus sales tax of 5 percent. All sales were on account. (Be sure to compute cost of goods sold using the FIFO cost flow method.) 7. Billed $107,000 of monitoring services for the year. Credit card sales amounted to $42,000, and the credit card company charged a 4 percent fee. The remaining $65,000 were sales on account. Sales tax is not charged on this service. 8. Replenished the petty cash fund on June 30. The fund had $5 cash and has receipts of $60 for yard mowing, $15 for office supplies expense, and $17 for miscellaneous expenses. 9. Collected the amount due from the credit card company. 10. Paid the sales tax collected on $69,600 of the alarm sales. 11. Paid installers and other employees a total of $65,000 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 $7,500. Cash was paid for the net amount of salaries due. 12. Fuzzy now offers a one-year warranty on its alarm systems. Paid $1,950 in warranty repairs during the year. 13. On September 1, borrowed $12,000 from State Bank. The note had an 8 percent interest rate and a one-year term to maturity. 14. Collected $136,100 of accounts receivable during the year. 15. Paid $15,000 of advertising expense during the year. 16. Paid $7,200 of utilities expense for the year. 17. Paid the payroll taxes, both the amounts withheld from the salaries plus the employer share of Social Security tax and Medicare tax, on $60,000 of the salaries plus $7,000 of the federal income tax that was withheld. (Unemployment taxes were not paid at this time.) 18. Paid the accounts payable. 19. Paid a dividend of $10,000 to the shareholders. Adjustments 20. There was $165 of supplies on hand at the end of the year. 21. Recognized the expired rent for the office building for the year. 22. Recognized uncollectible accounts expense for the year using the allowance method. The company revised its estimate of uncollectible accounts based on prior years’ experience. This year, Fuzzy estimates that 2.75 percent of sales on account will not be collected. 23. Recognized depreciation expense on the equipment and the van. The equipment 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 company uses double-declining-balance for the van and straight-line for the equipment. (A full year’s depreciation was taken in Year 8, the year of acquisition.) 24. The alarm systems sold in transaction 6 were covered with a one-year warranty. Pacilio estimated that the warranty cost would be 3 percent of alarm sales. 25. Recognized the accrued interest on the note payable at December 31, Year 9. Required a. Record the preceding transactions in general journal form. Round all amounts to the nearest whole dollar. b. Post the transactions to any 5 T-accounts (include cash, Accounts Receivables and Accounts Payable).

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The trial balance of Fuzzy Security Services Ltd. as of January 1, Year 9, had the following normal balances:
Cash
$93,380
Petty Cash
100
Accounts receivable
21,390
Allowance for doubtful accounts
2,485
Supplies
180
Prepaid rent
3,000
Merchandise inventory (23 @ $280)
6,440
Equipment
9,000
Van
27,000
Accumulated depreciation
14,900
Salaries payable
1,500
Common stock
50,000
Retained earnings
91,605
During Year 9, Fuzzy Security Services experienced the following transactions:
1. Paid the salaries payable from Year 8.
2. Paid $9,000 on May 2, Year 9, for one year’s office rent in advance.
3. Purchased $425 of supplies on account.
4. Purchased 145 alarm systems at a cost of $290 each. Paid cash for the purchase.
5. After numerous attempts to collect from customers, wrote off $2,060 of uncollectible accounts receivable.
6. Sold 130 alarm systems for $580 each plus sales tax of 5 percent. All sales were on account. (Be sure to compute cost of goods sold using the FIFO cost flow method.)
7. Billed $107,000 of monitoring services for the year. Credit card sales amounted to $42,000, and the credit card company charged a 4 percent fee. The remaining $65,000 were sales on account. Sales tax is not charged on this service.
8. Replenished the petty cash fund on June 30. The fund had $5 cash and has receipts of $60 for yard mowing, $15 for office supplies expense, and $17 for miscellaneous expenses.
9. Collected the amount due from the credit card company.
10. Paid the sales tax collected on $69,600 of the alarm sales.
11. Paid installers and other employees a total of $65,000 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 $7,500. Cash was paid for the net amount of salaries due.
12. Fuzzy now offers a one-year warranty on its alarm systems. Paid $1,950 in warranty repairs during the year.
13. On September 1, borrowed $12,000 from State Bank. The note had an 8 percent interest rate and a one-year term to maturity.
14. Collected $136,100 of accounts receivable during the year.
15. Paid $15,000 of advertising expense during the year.
16. Paid $7,200 of utilities expense for the year.
17. Paid the payroll taxes, both the amounts withheld from the salaries plus the employer share of Social Security tax and Medicare tax, on $60,000 of the salaries plus $7,000 of the federal income tax that was withheld. (Unemployment taxes were not paid at this time.)
18. Paid the accounts payable.
19. Paid a dividend of $10,000 to the shareholders.
Adjustments
20. There was $165 of supplies on hand at the end of the year.
21. Recognized the expired rent for the office building for the year.
22. Recognized uncollectible accounts expense for the year using the allowance method. The company revised its estimate of uncollectible accounts based on prior years’ experience. This year, Fuzzy estimates that 2.75 percent of sales on account will not be collected.
23. Recognized depreciation expense on the equipment and the van. The equipment 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 company uses double-declining-balance for the van and straight-line for the equipment. (A full year’s depreciation was taken in Year 8, the year of acquisition.)
24. The alarm systems sold in transaction 6 were covered with a one-year warranty. Pacilio estimated that the warranty cost would be 3 percent of alarm sales.
25. Recognized the accrued interest on the note payable at December 31, Year 9.
Required
a. Record the preceding transactions in general journal form. Round all amounts to the nearest whole dollar.
b. Post the transactions to any 5 T-accounts (include cash, Accounts Receivables and Accounts Payable).

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