Question

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
I need to 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. The first transaction is recorded as an example.

During 2021, Pacilio Security Services experienced the following transactions:
1.	Paid the sales tax payable from 2020.
2.	Paid the balance of the payroll liabilities due for 2020 (federal income tax, FICA taxes, and unemployment taxes).
3.	Issued 5,000 additional shares of the $5 par value common stock for $8 per share and 1,000 shares of $50 stated value, 5 percent cumulative preferred stock for $52 per share.
4.	Purchased $500 of supplies on account.
5.	Purchased 190 alarm systems at a cost of $310. Cash was paid for the purchase.
6.	After numerous attempts to collect from customers, wrote off $3,670 of uncollectible accounts receivable.
7.	Sold 210 alarm systems for $600 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.)
8.	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.
9.	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.
10.	Collected the amount due from the credit card company.
11.	Paid the sales tax collected on $105,000 of the alarm sales.
12.	Collected $198,000 of accounts receivable during the year.
13.	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 1.5 percent. Federal income taxes withheld amounted to $10,600. No employee exceeded $110,000 in total wages. The net salaries were paid in cash.
14.	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, 2021.
15.	Paid $1,625 in warranty repairs during the year.
16.	On November 1, 2021, paid the dividends that had been previously declared.
17.	Paid $18,500 of advertising expense during the year.
18.	Paid $6,100 of utilities expense for the year.
19.	Paid $9,200 of the Employee Income Tax Payable, $5,280 of the FICA Tax – Soc. Sec. Tax Payable and $1,320 of the FICA Tax – Medicare Tax Payable. Also, paid the Payroll Tax Expense for the 7.5% employer matching of FICA taxes on $88,000 of salaries.
20.	Paid the accounts payable.
21.	Paid bond interest and amortized the discount. The bond was issued in 2020 and pays interest at 6 percent.
22.	Paid the annual installment of $14,238 on the amortized note. The interest rate for the note is 7 percent.
Adjustment
23.	There was $190 of supplies on hand at the end of the year.
24.	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.
25.	Recognized depreciation expense on the equipment, van, and building. The equipment, purchased in 2018, 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.
26.	The alarm systems sold in transaction 7 were covered with a one-year warranty. Pacilio estimated that the warranty cost would be 2 percent of alarm sales.
27.	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 three employees exceeded $7,000.
28.	Recognized the employer Social Security and Medicare payroll tax that has not been paid on $8,000 of salaries expense.

Answer 1

Transaction No.	Increase/ Decrease	Cash flow
1	Decrease	OA
2	Decrease	OA
3	Increase	FA
4	Decrease	OA
5	Decrease	OA
6	Decrease	OA
7	Increase	OA
8	Increase	OA
9	Decrease	OA
10	Increase	OA
11	Decrease	OA
12	Increase	OA
13	No effect
14	Decrease	FA
15	Decrease	OA
16	Decrease	FA
17	Decrease	OA
18	Decrease	OA
19	Decrease	OA
20	Decrease	OA
21	Decrease	FA
22	Decrease	FA

The adjustment entries will not have any direct effect on the cash flows and hence not mentioned