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, 2021. December 31, 2021 Unadjusted Trial Balance Debit Credit Cash Accounts receivable Merchandise inventory Trucks Accumulated depreciation-Trucks $ 18,000 3,350 Allowance for doubtful accounts $ 838 13,200 37,000 0 Equipment 48,000 Accumulated depreciation-Equipment Accounts payable 13,050 5,250 Estimated warranty liability 1,650 Unearned services revenue 0 Interest payable 0 Long-term notes payable 20,000 D. Buggs, Capital 70,800 D. Buggs, Withdrawals 15,000 Extermination services revenue 70,000 Interest revenue 882 Sales (of merchandise) 73,426 Cost of goods sold 47,800 Depreciation expense-Trucks 0 Depreciation expense-Equipment 0 Wages expense 40,000 Interest expense 0 Rent expense 14,000 Bad debts expense 0 Miscellaneous expense 1,246 Repairs expense 10,500 Utilities expense Warranty expense 7,800 0 $ 255,896 $ 255,896 Totals 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, 2021, 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) $ 15,600 18,000 2,050 2,700 62 20 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 $684 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 $725. c. A truck is purchased and placed in service on January 1, 2021. Its cost is being depreciated with the straight-line method using the following facts and estimates. Original cost $ 37,000 Expected salvage value Useful life (years) $ 10,000 4 d. Two items of equipment (a sprayer and an injector) were purchased and put into service in early January 2019. They are being depreciated with the straight-line method using these facts and estimates. Original cost Sprayer $ 28,000 Injector $ 20,000 Expected salvage value $ 3,000 $ 3,000 Useful life (years) 8 5 e. On September 1, 2021, the company is paid $8,700 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 2.5% of the extermination services revenue of $64,200 for 2021. No warranty expense has been recorded for 2021. All costs of servicing warranties in 2021 were properly debited to the Estimated Warranty Liability account. g. The $20,000 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, 2021. h. The ending inventory of merchandise is counted and determined to have a cost of $12,700. 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 2021. d. Depreciation expense for the two items of equipment used during year 2021. e. The adjusted 2021 ending balances of the Extermination Services Revenue and Unearned Services Revenue accounts. f. The adjusted 2021 ending balances of the Warranty Expense and the Estimated Warranty Liability accounts. g. The adjusted 2021 ending balances of the Interest Expense and the Interest Payable accounts. 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-Off's adjusted balance for Merchandise Inventory matches the year-end physical count. 4a. Prepare a single-step income statement for 2021. 4b. Prepare the statement of owner's equity (cash withdrawals during 2021 were $15,000 and owner investments were $0) for 2021. 4c. Prepare a classified balance sheet for December 31, 2021. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 4B Req 4C 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 2021. d. Depreciation expense for the two items of equipment used during year 2021. e. The adjusted 2021 ending balances of the Extermination Services Revenue and Unearned Services Revenue accounts. Note: Do not round your intermediate calculations. f. The adjusted 2021 ending balances of the Warranty Expense and the Estimated Warranty Liability accounts. g. The adjusted 2021 ending balances of the Interest Expense and the Interest Payable accounts. a. Reconciled balance of cash a. Omitted check b. Necessary adjustment c. Depreciation expense $ 16,250 $ 1,792 $ 2,436 $ 3,275 Sprayer Injector d. Depreciation expense $ 7,650 $ 3,760 Extermination Services Unearned Services Revenue Revenue 71,400 $ 3,500 e. Ending balances after adjustment $ Estimated Warranty Expense Warranty Liability f. Ending balances after adjustment $ 595 $ 4,085 Interest Expense g. Ending balances after adjustment $ < Req 1 Interest Payable 1,190 $ 1,190 Req 2 > Show less Req 1 Req 2 Req 3 Req 4A Req 4B Req 4C 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. Note: Do not round your intermediate calculations. BUG-OFF EXTERMINATORS December 31, 2021 Unadjusted Adjustments Account Title Trial Balance Adjusted Trial Balance Debit Credit Debit Credit Debit Credit Cash $ 18,000 $ 1,750 $ 16,250 Accounts receivable 3,350 Allowance for doubtful accounts $ 838 Merchandise inventory 13,200 Trucks 37,000 Accumulated depreciation-Trucks 0 Equipment 48,000 Accumulated depreciation-Equipment 13,050 Accounts payable 5,250 Estimated warranty liability 1,650 Unearned services revenue 0 Interest payable 0 Long-term notes payable 20,000 D. Buggs, Capital 70,800 D. Buggs, Withdrawals 15,000 Extermination services revenue 70,000 Interest revenue 882 Sales 73,426 Cost of goods sold 47,800 Depreciation expense-Trucks 0 Depreciation expense-Equipment 0 Wages expense 40,000 Interest expense 0 Rent expense 14,000 Bad debts expense 0 Miscellaneous expense 1,246 Repairs expense 10,500 Utilities expense 7,800 0 Warranty expense Totals $ 255,896 $ 255,896 $ 0 $ 1,750 $ 16,250 $ 0 < Req 1 Req 3 > Req 1 Req 2 Req 3 Req 4A Req 4B Req 4C 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. Note: 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. View transaction list View journal entry worksheet No Transaction General Journal Debit Credit 1 (a) Miscellaneous expenses Accounts payable Interest revenue Cash i 2 (b1) Allowance for doubtful accounts 3 (b2) Accounts receivable Bad debts expense Allowance for doubtful accounts 4 (c) Accumulated depreciation-Trucks Accumulated depreciation-Trucks 5 6 (d) (e) Accumulated depreciation-Equipment Accumulated depreciation-Equipment Extermination services revenue Unearned services revenue 7 (f) Warranty expense Estimated warranty liability 8 (g) No journal entry required < Req 2 Req 4A > Show less Req 1 Req 2 Req 3 Req 4A Req 4B Req 4C Prepare a single-step income statement for 2021. BUG-OFF EXTERMINATORS Income Statement For Year Ended December 31, 2021 Revenues Extermination services revenue Sales Interest revenue Total revenues Expenses Cost of goods sold Depreciation expense-Trucks Depreciation expense-Equipment Wages expense Repairs expense Rent expense Bad debts expense Miscellaneous expenses Utilities expense Warranty expense Total expenses Net income $ 0 0 $ 0 < Req 3 Req 4B > Req 1 Req 2 Req 3 Req 4A Req 4B Req 4C Prepare the statement of owner's equity (cash withdrawals during 2021 were $15,000 and owner investments were $0) for 2021. BUG-OFF EXTERMINATORS Statement of Owner's Equity For Year Ended December 31, 2021 D. Buggs, Capital, December 31, 2020 Add: Investments by owner Less: Withdrawals by owner 0 D. Buggs, Capital, December 31, 2021 $ < Req 4A Req 4C > Req 1 Req 2 Req 3 Req 4A Req 4B Req 4C Prepare a classified balance sheet for December 31, 2021. Note: Amounts to be deducted should be indicated with a minus sign. Do not round your intermediate calculations. BUG-OFF EXTERMINATORS Balance Sheet December 31, 2021 Assets Current assets: Cash Accounts receivable Allowance for doubtful accounts Merchandise inventory Total current assets Plant assets: Trucks Accumulated depreciation-Trucks Equipment Accumulated depreciation-Equipment Total plant assets Total assets Liabilities Current liabilities: Accounts payable Estimated warranty liability Unearned services revenue Total current liabilities Long-term liabilities: Long-term notes payable Total liabilities D. Buggs, Capital Equity Total liabilities and equity < Req 4B $ 0 0 $ 0 Req 4C >