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. depreciation-Trucks Equipment Accum. depreciation-Equipment Accounts payable Estimated warranty liability Unearned services revenue Interest payable Long-term notes payable Common stock Retained earnings Dividends Extermination services revenue Interest revenue Sales (of merchandise) of goods sold Depreciation expense-Trucks Depreciation expense-Equipment Wages expense Interest expense Rent expense Bad debts expense Miscellaneous expense Repairs expense Utilities expense Warranty expense Totals Unadjusted Trial Balance $ 20,400 5,700 $ 862 16,800 49,000 0 101,600 25,800 5,850 2,250 0 0 32,000 27,000 71,400 27,000 94,000 906 117,826 51,400 0 0 52,000 0 26,000 0 1, 294 16,500 10,200 0 $377,894 $377,894 Cost of 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) $16,800 20,400 2,650 3,300 86 32 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 $696 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 $785. 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) $40,500 $14,800 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 $40,600 $21,400 $ 3,000 $ 4,200 8 5 e. On September 1, 2019, the company is paid $23,100 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 $78,600 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 $23,500 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 $16,800. 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 the statement of retained earnings (cash dividends during 2019 were $27,000) for 2019. 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 Req 4A Req 4B Req 4C Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg 3 Req 4A Req 4B Reg 4C Prepare the statement of retained earnings (cash dividends during 2019 were $27,000) for 2019. BUG-OFF EXTERMINATORS Statement of Retained Earnings For Year Ended December 31, 2019 0 $ 0 Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Req 4B Req 4C Prepare a classified balance sheet as at 2019. (Negative amounts should be indicated by a minus sign. Do not round your intermediate calculations.) BUG-OFF EXTERMINATORS Balance Sheet December 31, 2019 Assets Current assets: 0 0 Total current assets Plant assets: 0 Ooo Total plant assets $ Total assets Liabilities Current liabilities: $ 0 Total current liabilities Long-term liabilities: 0 Total liabilities Equity $ $ 0 Total liabilities and equity 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. depreciation-Trucks Equipment Accum. depreciation-Equipment Accounts payable Estimated warranty liability Unearned services revenue Interest payable Long-term notes payable Common stock Retained earnings Dividends Extermination services revenue Interest revenue Sales (of merchandise) of goods sold Depreciation expense-Trucks Depreciation expense-Equipment Wages expense Interest expense Rent expense Bad debts expense Miscellaneous expense Repairs expense Utilities expense Warranty expense Totals Unadjusted Trial Balance $ 20,400 5,700 $ 862 16,800 49,000 0 101,600 25,800 5,850 2,250 0 0 32,000 27,000 71,400 27,000 94,000 906 117,826 51,400 0 0 52,000 0 26,000 0 1, 294 16,500 10,200 0 $377,894 $377,894 Cost of 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) $16,800 20,400 2,650 3,300 86 32 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 $696 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 $785. 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) $40,500 $14,800 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 $40,600 $21,400 $ 3,000 $ 4,200 8 5 e. On September 1, 2019, the company is paid $23,100 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 $78,600 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 $23,500 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 $16,800. 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 the statement of retained earnings (cash dividends during 2019 were $27,000) for 2019. 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 Req 4A Req 4B Req 4C Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg 3 Req 4A Req 4B Reg 4C Prepare the statement of retained earnings (cash dividends during 2019 were $27,000) for 2019. BUG-OFF EXTERMINATORS Statement of Retained Earnings For Year Ended December 31, 2019 0 $ 0 Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Req 4B Req 4C Prepare a classified balance sheet as at 2019. (Negative amounts should be indicated by a minus sign. Do not round your intermediate calculations.) BUG-OFF EXTERMINATORS Balance Sheet December 31, 2019 Assets Current assets: 0 0 Total current assets Plant assets: 0 Ooo Total plant assets $ Total assets Liabilities Current liabilities: $ 0 Total current liabilities Long-term liabilities: 0 Total liabilities Equity $ $ 0 Total liabilities and equity