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Bug - Off Exterminators provides pest control services and sells extermination products manufactured by other companies. Following is the company's unadjusted trial balance as of

Bug-Off Exterminators provides pest control services and sells extermination products manufactured by other companies. Following is the company's unadjusted trial balance as of December 31,2026.
December 31,2026
Unadjusted Trial Balance
Debit Credit
Cash $ 19,800
Accounts receivable 30,980
Allowance for doubtful accounts $ 856
Merchandise inventory 15,900
Trucks 46,000
Accumulated depreciationTrucks 0
Equipment 53,400
Accumulated depreciationEquipment 14,580
Accounts payable 5,700
Estimated warranty liability 2,100
Unearned services revenue 0
Interest payable 0
Long-term notes payable 29,000
Common stock 27,000
Retained earnings 64,500
Dividends 24,000
Extermination services revenue 88,000
Interest revenue 900
Sales (of merchandise)105,826
Cost of goods sold 50,500
Depreciation expenseTrucks 0
Depreciation expenseEquipment 0
Wages expense 49,000
Interest expense 0
Rent expense 23,000
Bad debts expense 0
Miscellaneous expense 1,282
Repairs expense 15,000
Utilities expense 9,600
Warranty expense 0
Totals $ 338,462 $ 338,462
The following information in a through h applies to the company at the end of the current year.
The bank reconciliation as of December 31,2026, includes the following facts.
Cash balance per bank $ 16,500
Cash balance per books 19,800
Outstanding checks 2,500
Deposit in transit 3,150
Interest earned (on bank account)80
Bank service charges (miscellaneous expense)29
Reported on the bank statement is a canceled check that the company failed to record. (Information from the bank reconciliation allows you to determine the amount of this check, which is a payment on an account payable.)
An examination of customers accounts shows that accounts totaling $693 should be written off as uncollectible. Using an aging of receivables, the company determines that the ending balance of the Allowance for Doubtful Accounts should be $770.
A truck is purchased and placed in service on January 1,2026. Its cost is being depreciated with the straight-line method using the following facts and estimates.
Original cost $ 46,000
Expected salvage value $ 13,600
Useful life (years)4
Two items of equipment (a sprayer and an injector) were purchased and put into service in early January 2024. They are being depreciated with the straight-line method using these facts and estimates.
Sprayer Injector
Original cost $ 29,800 $ 23,600
Expected salvage value $ 3,000 $ 3,900
Useful life (years)85
On September 1,2026, the company is paid $19,500 cash in advance to provide monthly service for an apartment complex for one year. The company began providing the services in September. When the cash was received, the full amount was credited to the Extermination Services Revenue account.
The company offers a warranty for the services it sells. The expected cost of providing warranty service is 2.5% of the extermination services revenue of $75,000 for 2026. No warranty expense has been recorded for 2026. All costs of servicing warranties in 2026 were properly debited to the Estimated Warranty Liability account.
The $29,000 long-term note is an 8%, five-year, interest-bearing note with interest payable annually on December 31. The note was signed with First National Bank on December 31,2026.
The ending inventory of merchandise is counted and determined to have a cost of $14,500. Bug-Off uses a perpetual inventory system.

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