| 4.2 | | 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, 2013. | | BUG-OFF EXTERMINATORS | | December 31, 2013 | | | Unadjusted Trial Balance | | Cash | $ | 16,300 | | | | | | Accounts receivable | | 5,600 | | | | | | Allowance for doubtful accounts | | | | $ | 827 | | | Merchandise inventory | | 13,200 | | | | | | Trucks | | 31,520 | | | | | | Accum. depreciationTrucks | | | | | 0 | | | Equipment | | 48,050 | | | | | | Accum. depreciationEquipment | | | | | 13,300 | | | Accounts payable | | | | | 5,900 | | | Estimated warranty liability | | | | | 1,340 | | | Unearned services revenue | | | | | 0 | | | Interest payable | | | | | 0 | | | Long-term notes payable | | | | | 13,300 | | | D. Buggs, Capital | | | | | 65,889 | | | D. Buggs, Withdrawals | | 10,300 | | | | | | Extermination services revenue | | | | | 60,250 | | | Interest revenue | | | | | 867 | | | Sales (of merchandise) | | | | | 72,426 | | | Cost of goods sold | | 48,000 | | | | | | Depreciation expenseTrucks | | 0 | | | | | | Depreciation expenseEquipment | | 0 | | | | | | Wages expense | | 35,400 | | | | | | Interest expense | | 0 | | | | | | Rent expense | | 9,300 | | | | | | Bad debts expense | | 0 | | | | | | Miscellaneous expense | | 1,229 | | | | | | Repairs expense | | 9,500 | | | | | | Utilities expense | | 5,700 | | | | | | Warranty expense | | 0 | | | | | | | | | | | | | | Totals | $ | 234,099 | | $ | 234,099 | | | | | | | | | | | | | | | | | | | | The following information in a through h applies to the company at the end of the current year. | | a. | The bank reconciliation as of December 31, 2013, includes the following facts. | | | | | | Cash balance per bank | $ | 14,900 | | Cash balance per books | | 16,300 | | Outstanding checks | | 1,900 | | Deposit in transit | | 2,350 | | Interest earned (on bank account) | | 34 | | Bank service charges (miscellaneous expense) | | 25 | | | | 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.) | | b. | An examination of customers accounts shows that accounts totaling $673 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 $713. | | c. | A truck is purchased and placed in service on January 1, 2013. Its cost is being depreciated with the straight-line method using the following facts and estimates. | | | | | | Original cost | $ | 31,520 | | Expected salvage value | | 7,400 | | Useful life (years) | | 4 | | | | d. | Two items of equipment (a sprayer and an injector) were purchased and put into service in early January 2011. They are being depreciated with the straight-line method using these facts and estimates. | | | | Sprayer | | | Injector | | Original cost | $ | 28,400 | | $ | 19,650 | | Expected salvage value | | 3,600 | | | 3,200 | | Useful life (years) | | 8 | | | 5 | | | | e. | On August 1, 2013, the company is paid $4,440 cash in advance to provide monthly service for an apartment complex for one year. The company began providing the services in August. When the cash was received, the full amount was credited to the Extermination Services Revenue account. | | f. | The company offers a warranty for the services it sells. The expected cost of providing warranty service is 1.5% of the extermination services revenue of $57,660 for 2013. No warranty expense has been recorded for 2013. All costs of servicing warranties in 2013 were properly debited to the Estimated Warranty Liability account. | | g. | The $13,300 long-term note is an 8%, 5-year, interest-bearing note with interest payable annually on December 31. The note was signed with First National Bank on December 31, 2013. | | h. | The ending inventory of merchandise is counted and determined to have a cost of $13,200. Bug-Off uses a perpetual inventory system. | | 1. | Use the preceding information to determine amounts for the following items. | | a. | Correct (reconciled) ending balance of Cash, and the amount of the omitted check. | | b. | Adjustment needed to obtain the correct ending balance of the Allowance for Doubtful Accounts. | | | | | c. | Depreciation expense for the truck used during year 2013. | | | | | d. | Depreciation expense for the two items of equipment used during year 2013. | | | | | e. | The adjusted 2013 ending balances of the Extermination | Services Revenue and Unearned Services Revenue accounts. (Do not round your intermediate calculations.) | | | | | | f. | The adjusted 2013 ending balances of the accounts for Warranty Expense and Estimated Warranty Liability. | | | | | g. | The adjusted 2013 ending balances of the accounts for Interest Expense and Interest Payable. | | | | | 2. | Use the results of part 1 to complete the six-column table by first entering the appropriate adjustments for items a through g and then completing the adjusted trial balance columns. (Hint: Item b requires two adjustments.) (Do not round your intermediate calculations.) | | | | | | | | | | | | | | BUG-OFF EXTERMINATORS | | | | | | | | December 31, 2013 | | | | | | | | | Unadjusted Trial Balance | | Adjustments | | Adjusted Trial Balance | | | | | | Account Title | Debit | Credit | Debit | Credit | Debit | Credit | Debit/credit | | | | | | | Cash | $16,300 | | | | | | | | | | | | | Accounts receivable | 5,600 | | | | | | | | | | | | | Allowance for doubtful accounts | | $827 | | | | | | | | | | | | Merchandise inventory | 13,200 | | | | | | | | | | | | | Trucks | 31,520 | | | | | | | | | | | | | Accum. deprec.Trucks | | 0 | | | | | | | | | | | | Equipment | 48,050 | | | | | | | | | | | | | Accum. deprec.Equip | | 13,300 | | | | | | | | | | | | Accounts payable | | 5,900 | | | | | | | | | | | | Estim. warranty liability | | 1,340 | | | | | | | | | | | | Unearned services rev | | 0 | | | | | | | | | | | | Interest payable | | 0 | | | | | | | | | | | | Long-term notes payable | | 13,300 | | | | | | | | | | | | D. Buggs, Capital | | 65,889 | | | | | | | | | | | | D. Buggs, Withdrawals | 10,300 | | | | | | | | | | | | | Extermination services revenue | | 60,250 | | | | | | | | | | | | Interest revenue | | 867 | | | | | | | | | | | | Sales | | 72,426 | | | | | | | | | | | | Cost of goods sold | 48,000 | | | | | | | | | | | | | Deprec. expenseTrucks | 0 | | | | | | | | | | | | | Deprec. expenseEquip | 0 | | | | | | | | | | | | | Wages expense | 35,400 | | | | | | | | | | | | | Interest expense | 0 | | | | | | | | | | | | | Rent expense | 9,300 | | | | | | | | | | | | | Bad debts expense | 0 | | | | | | | | | | | | | Miscellaneous expense | 1,229 | | | | | | | | | | | | | Repairs expense | 9,500 | | | | | | | | | | | | | Utilities expense | 5,700 | | | | | | | | | | | | | Warranty expense | 0 | | | | | | | | | | | | | Totals | $234,099 | $234,099 | $0 | $0 | $0 | $0 | | | | | | | | | | | | | + The full content of this question did not transfer to your assignment. Please try again. reload | | 3. | Prepare journal entries to record the adjustments entered on the six-column table. Assume Bug-Offs adjusted balance for Merchandise Inventory matches the year-end physical count. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Do not round your intermediate calculations.) | | | A | B | C | D | | | Transaction | General Journal | Debit | Credit | | 1 | (a) | Miscellaneous expenses | | | | 2 | | Accounts payable | | | | 3 | | Interest revenue | | | | 4 | | Cash | | | | 5 | | | | | | 6 | (b1) | Allowance for doubtful accounts | | | | 7 | | Accounts receivable | | | | 8 | | | | | | 9 | (b2) | Bad debts expense | | | | 10 | | Allowance for doubtful accounts | | | | 11 | | | | | | 12 | (c) | Depreciation expenseTrucks | | | | 13 | | Accumulated depreciationTrucks | | | | 14 | | | | | | 15 | (d) | Depreciation expenseEquipment | | | | 16 | | Accumulated depreciationEquipment | | | | 17 | | | | | | 18 | (e) | Extermination services revenue | | | | 19 | | Unearned services revenue | | | | 20 | | | | | | 21 | (f) | Warranty expense | | | | 22 | | Estimated warranty liability | | | | 23 | | | | | | 24 | (g) | No journal entry required | | | no no no The full content of this question did not transfer to your assignment. Please try again. reload | | | | | | | Prepare a statement of owners equity (cash withdrawals during 2013 were $10,300) for year 2013 and there were no investments by the owner in the current year. | | | | | | | | | | BUG-OFF EXTERMINATORS | | | Statement of Owners Equity | | | For Year Ended December 31, 2013 | | | D. Buggs, Capital, December 31, 2012 | | | | Add: Net income | | | | | 0 | | | Less: Withdrawals by owner | | | | D. Buggs, Capital, December 31, 2013 | $0 | | | | | | | | + The full content of this question did not transfer to your assignment. Please try again. reload | 4.3 | Prepare a Classified balance sheet as at 2013. (Negative amounts should be indicated by a minus sign. Do not round your intermediate calculations.) | | | | |
