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, 2019. December 31, 2019 Unadjusted Trial Balance Cash $ 20,000 Accounts receivable 5,500 Allowance for doubtful accounts $ 858 Merchandise inventory 8,700 Trucks 47,000 Accum. depreciationTrucks 0 Equipment 92,400 Accum. depreciationEquipment 24,200 Accounts payable 5,750 Estimated warranty liability 2,150 Unearned services revenue 0 Interest payable 0 Long-term notes payable 22,500 D. Buggs, Capital 93,800 D. Buggs, Withdrawals 25,000 Extermination services revenue 88,275 Interest revenue 902 Sales (of merchandise) 111,551 Cost of goods sold 50,800 Depreciation expenseTrucks 0 Depreciation expenseEquipment 0 Wages expense 50,000 Interest expense 0 Rent expense 24,000 Bad debts expense 0 Miscellaneous expense 1,286 Repairs expense 15,500 Utilities expense 9,800 Warranty expense 0 Totals $ 349,986 $ 349,986 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, 2019, includes the following facts. Cash balance per bank $ 16,600 Cash balance per books 20,000 Outstanding checks 2,550 Deposit in transit 3,200 Interest earned (on bank account) 82 Bank service charges (miscellaneous expense) 30 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 $694 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 $775. A truck is purchased and placed in service on January 1, 2019. Its cost is being depreciated with the straight-line method using the following facts and estimates. Original cost $ 39,500 Expected salvage value $ 14,000 Useful life (years) 4 Two items of equipment (a sprayer and an injector) were purchased and put into service in early January 2017. They are being depreciated with the straight-line method using these facts and estimates. Sprayer Injector Original cost $ 39,000 $ 21,000 Expected salvage value $ 3,000 $ 4,000 Useful life (years) 8 5 On September 1, 2019, the company is paid $20,700 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 4% of the extermination services revenue of $74,475 for 2019. No warranty expense has been recorded for 2019. All costs of servicing warranties in 2019 were properly debited to the Estimated Warranty Liability account. The $22,500 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, 2019. The ending inventory of merchandise is counted and determined to have a cost of $8,700. Bug-Off uses a perpetual inventory system. Required: 1. Determine amounts for the following items: Correct (reconciled) ending balance of Cash; and the amount of the omitted check. Adjustment needed to obtain the correct ending balance of the Allowance for Doubtful Accounts. Depreciation expense for the truck used during year 2019. Depreciation expense for the two items of equipment used during year 2019. The adjusted 2019 ending balances of the Extermination Services Revenue and Unearned Services Revenue accounts. The adjusted 2019 ending balances of the accounts for Warranty Expense and Estimated Warranty Liability. The adjusted 2019 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. 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. 4a. Prepare a single-step income statement for year 2019. 4b. Prepare a statement of owners equity (cash withdrawals during 2019 were $25,000) for year 2019 and there were no investments by the owner in the current year. 4c. Prepare a classified balance sheet as at 2019.
Comprehensive Problem Bug-Off Exterminators 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, 2019. December 31, 2019 Cash Accounts receivable Allowance for doubtful accounts Merchandise inventory Trucks Accum. depreciationTrucks Equipment Accum. depreciation-Equipment Accounts payable Estimated warranty liability Unearned services revenue Interest payable Long-term notes payable D. Buggs, Capital D. Buggs, Withdrawals Extermination services revenue Interest revenue Sales (of merchandise) Cost of goods sold Depreciation expenseTrucks Depreciation expense-Equipment Wages expense Interest expense Rent expense Bad debts expense Miscellaneous expense Repairs expense Utilities expense Warranty expense Unadjusted Trial Balance $ 20,000 5,500 $ 858 8,700 47,000 0 92,400 24,200 5,750 2,150 0 0 22,500 93,800 25,000 88,275 902 111,551 50.800 0 0 50,000 0 24,000 0 1,286 15,500 9,800 0 Totals $349,986 $349,986 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, 2019, includes the following facts. Cash balance per bank Cash balance per books Outstanding checks Deposit in transit Interest earned (on bank account) Bank service charges (miscellaneous expense) $16,600 20,000 2,550 3,200 82 30 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 $694 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 $775. c. A truck is purchased and placed in service on January 1, 2019. Its cost is being depreciated with the straight-line method using the following facts and estimates. Original cost Expected salvage value Useful life (years) $39,500 $14.000 4 d. Two items of equipment (a sprayer and an injector) were purchased and put into service in early January 2017. They are being depreciated with the straight-line method using these facts and estimates. Original cost Expected salvage value Useful life (years) Sprayer Injector $ 39,000 $ 21,000 $ 3,000 $ 4,000 8 5 e. On September 1, 2019, the company is paid $20,700 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. f. The company offers a warranty for the services it sells. The expected cost of providing warranty service is 4% of the extermination services revenue of $74,475 for 2019. No warranty expense has been recorded for 2019. All costs of servicing warranties in 2019 were properly debited to the Estimated Warranty Liability account. g. The $22,500 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, 2019. h. The ending inventory of merchandise is counted and determined to have a cost of $8,700. Bug-Off uses a perpetual inventory system. Required: 1. 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 2019. d. Depreciation expense for the two items of equipment used during year 2019. e. The adjusted 2019 ending balances of the Extermination Services Revenue and Unearned Services Revenue accounts. f. The adjusted 2019 ending balances of the accounts for Warranty Expense and Estimated Warranty Liability. g. The adjusted 2019 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 brequires two adjustments. 3. Prepare journal entries to record the adjustments entered on the six-column table. Assume Bug-Off's adjusted balance for Merchandise Inventory matches the year-end physical count. 4a. Prepare a single-step income statement for year 2019. 4b. Prepare a statement of owner's equity (cash withdrawals during 2019 were $25,000) for year 2019 and there were no investments by the owner in the current year. 4c. Prepare a classified balance sheet as at 2019. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4A Reg 4B Reg 4C 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 2019. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3 Req 4A Req 4B Req 4C 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 2019. d. Depreciation expense for the two items of equipment used during year 2019. e. The adjusted 2019 ending balances of the Extermination Services Revenue and Unearned Services Revenue accounts. (Do not round your intermediate calculations.) f. The adjusted 2019 ending balances of the accounts for Warranty Expense and Estimated Warranty Liability. g. The adjusted 2019 ending balances of the accounts for Interest Expense and Interest Payable. Show less a Reconciled balance Omitted check Necessary adjustment Depreciation expense b. C. d. Sprayer Injector Depreciation expense CD Services Revenue Unearned Services Revenue Ending balances after adjustment Warranty Expense Estimated Warranty Liability Ending balances after adjustment 9 Interest Expense Interest Payable Ending balances after adjustment Adjustments Unadjusted Trial Balance Debit Credit Adjusted Trial Balance Debit Credit Debit Credit $ 20,000 5,500 $ 858 8,700 47,000 0 92,400 24,200 5,750 2,150 0 0 22,500 93,800 Account Title Cash Accounts receivable Allowance for doubtful accounts Merchandise inventory Trucks Accum. deprec.-Trucks Equipment Accum. deprec.-Equip Accounts payable Estim. warranty liability Unearned services rev Interest payable Long-term notes payable D. Buggs, Capital D. Buggs, Withdrawals Extermination services revenue Interest revenue Sales Cost of goods sold Deprec. expense-Trucks Deprec. expense-Equip Wages expense Interest expense Rent expense Bad debts expense Miscellaneous expense Repairs expense Utilities expense Warranty expense 25,000 88,275 902 111,551 50,800 0 0 50,000 0 24,000 0 1,286 15,500 9,800 0 Totals. $. 349.986)..... 349.986 View transaction list X! 1 Record the adjustment to the Cash account. > Record the write off of uncollectible accounts. N 3 Record the adjustment for bad debts. 4 Record depreciation on the truck. 5 Record depreciation on the equipment. Credit 6 Recorded the adjustment for unearned revenues. 7 Record the estimated warranty expense. 8 Record the adjustment for interest. Note : = journal entry has been entered Record entry Clear entry View general journal Prepare a single-step income statement for year 2019. BUG-OFF EXTERMINATORS Income Statement For Year Ended December 31, 2019 Revenues Total revenues Expenses Total expenses Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Req 4A Req 4B Req 4C Prepare a statement of owner's equity (cash withdrawals during 2019 were $25,000) for year 2019 and there were no investments by the owner in the current year. BUG-OFF EXTERMINATORS Statement of Owner's Equity For Year Ended December 31, 2019 balance sheet December 31, 2019 Assets Current assets: Total current assets Plant assets: Total plant assets Total assets Liabilities Current liabilities: Total current liabilities Long-term liabilities: Total liabilities Equity Total liabilities and equity Comprehensive Problem Bug-Off Exterminators 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, 2019. December 31, 2019 Cash Accounts receivable Allowance for doubtful accounts Merchandise inventory Trucks Accum. depreciationTrucks Equipment Accum. depreciation-Equipment Accounts payable Estimated warranty liability Unearned services revenue Interest payable Long-term notes payable D. Buggs, Capital D. Buggs, Withdrawals Extermination services revenue Interest revenue Sales (of merchandise) Cost of goods sold Depreciation expenseTrucks Depreciation expense-Equipment Wages expense Interest expense Rent expense Bad debts expense Miscellaneous expense Repairs expense Utilities expense Warranty expense Unadjusted Trial Balance $ 20,000 5,500 $ 858 8,700 47,000 0 92,400 24,200 5,750 2,150 0 0 22,500 93,800 25,000 88,275 902 111,551 50.800 0 0 50,000 0 24,000 0 1,286 15,500 9,800 0 Totals $349,986 $349,986 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, 2019, includes the following facts. Cash balance per bank Cash balance per books Outstanding checks Deposit in transit Interest earned (on bank account) Bank service charges (miscellaneous expense) $16,600 20,000 2,550 3,200 82 30 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 $694 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 $775. c. A truck is purchased and placed in service on January 1, 2019. Its cost is being depreciated with the straight-line method using the following facts and estimates. Original cost Expected salvage value Useful life (years) $39,500 $14.000 4 d. Two items of equipment (a sprayer and an injector) were purchased and put into service in early January 2017. They are being depreciated with the straight-line method using these facts and estimates. Original cost Expected salvage value Useful life (years) Sprayer Injector $ 39,000 $ 21,000 $ 3,000 $ 4,000 8 5 e. On September 1, 2019, the company is paid $20,700 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. f. The company offers a warranty for the services it sells. The expected cost of providing warranty service is 4% of the extermination services revenue of $74,475 for 2019. No warranty expense has been recorded for 2019. All costs of servicing warranties in 2019 were properly debited to the Estimated Warranty Liability account. g. The $22,500 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, 2019. h. The ending inventory of merchandise is counted and determined to have a cost of $8,700. Bug-Off uses a perpetual inventory system. Required: 1. 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 2019. d. Depreciation expense for the two items of equipment used during year 2019. e. The adjusted 2019 ending balances of the Extermination Services Revenue and Unearned Services Revenue accounts. f. The adjusted 2019 ending balances of the accounts for Warranty Expense and Estimated Warranty Liability. g. The adjusted 2019 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 brequires two adjustments. 3. Prepare journal entries to record the adjustments entered on the six-column table. Assume Bug-Off's adjusted balance for Merchandise Inventory matches the year-end physical count. 4a. Prepare a single-step income statement for year 2019. 4b. Prepare a statement of owner's equity (cash withdrawals during 2019 were $25,000) for year 2019 and there were no investments by the owner in the current year. 4c. Prepare a classified balance sheet as at 2019. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4A Reg 4B Reg 4C 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 2019. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3 Req 4A Req 4B Req 4C 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 2019. d. Depreciation expense for the two items of equipment used during year 2019. e. The adjusted 2019 ending balances of the Extermination Services Revenue and Unearned Services Revenue accounts. (Do not round your intermediate calculations.) f. The adjusted 2019 ending balances of the accounts for Warranty Expense and Estimated Warranty Liability. g. The adjusted 2019 ending balances of the accounts for Interest Expense and Interest Payable. Show less a Reconciled balance Omitted check Necessary adjustment Depreciation expense b. C. d. Sprayer Injector Depreciation expense CD Services Revenue Unearned Services Revenue Ending balances after adjustment Warranty Expense Estimated Warranty Liability Ending balances after adjustment 9 Interest Expense Interest Payable Ending balances after adjustment Adjustments Unadjusted Trial Balance Debit Credit Adjusted Trial Balance Debit Credit Debit Credit $ 20,000 5,500 $ 858 8,700 47,000 0 92,400 24,200 5,750 2,150 0 0 22,500 93,800 Account Title Cash Accounts receivable Allowance for doubtful accounts Merchandise inventory Trucks Accum. deprec.-Trucks Equipment Accum. deprec.-Equip Accounts payable Estim. warranty liability Unearned services rev Interest payable Long-term notes payable D. Buggs, Capital D. Buggs, Withdrawals Extermination services revenue Interest revenue Sales Cost of goods sold Deprec. expense-Trucks Deprec. expense-Equip Wages expense Interest expense Rent expense Bad debts expense Miscellaneous expense Repairs expense Utilities expense Warranty expense 25,000 88,275 902 111,551 50,800 0 0 50,000 0 24,000 0 1,286 15,500 9,800 0 Totals. $. 349.986)..... 349.986 View transaction list X! 1 Record the adjustment to the Cash account. > Record the write off of uncollectible accounts. N 3 Record the adjustment for bad debts. 4 Record depreciation on the truck. 5 Record depreciation on the equipment. Credit 6 Recorded the adjustment for unearned revenues. 7 Record the estimated warranty expense. 8 Record the adjustment for interest. Note : = journal entry has been entered Record entry Clear entry View general journal Prepare a single-step income statement for year 2019. BUG-OFF EXTERMINATORS Income Statement For Year Ended December 31, 2019 Revenues Total revenues Expenses Total expenses Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Req 4A Req 4B Req 4C Prepare a statement of owner's equity (cash withdrawals during 2019 were $25,000) for year 2019 and there were no investments by the owner in the current year. BUG-OFF EXTERMINATORS Statement of Owner's Equity For Year Ended December 31, 2019 balance sheet December 31, 2019 Assets Current assets: Total current assets Plant assets: Total plant assets Total assets Liabilities Current liabilities: Total current liabilities Long-term liabilities: Total liabilities Equity Total liabilities and equity
