Bug-Off Exterminators provides pest control services and sells extermination products manufactured by other companies. The following six-column table contains the companys unadjusted trial balance as of December 31, 2018.

BUG-OFF EXTERMINATORS
December 31, 2018
	Unadjusted Trial Balance
Cash	$	18,000
Accounts receivable		2,500
Allowance for doubtful accounts					$	814
Merchandise inventory		10,400
Trucks		32,400
Accum. depreciationTrucks						0
Equipment		42,000
Accum. depreciationEquipment						12,600
Accounts payable						5,500
Estimated warranty liability						1,300
Unearned services revenue						0
Interest payable						0
Long-term notes payable						15,400
Common stock						12,000
Retained earnings						48,100
Dividends		13,000
Extermination services revenue						68,000
Interest revenue						859
Sales (of merchandise)						56,002
Cost of goods sold		44,400
Depreciation expenseTrucks		0
Depreciation expenseEquipment		0
Wages expense		33,000
Interest expense		0
Rent expense		8,700
Bad debts expense		0
Miscellaneous expense		1,205
Repairs expense		8,100
Utilities expense		6,870
Warranty expense		0
Totals	$	220,575			$	220,575

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, 2018, includes the following facts.

Cash balance per bank	$	15,100
Cash balance per books		17,000
Outstanding checks		1,800
Deposit in transit		2,450
Interest earned (on bank account)		52
Bank service charges (miscellaneous expense)		15

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 $679 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 $700.

c. A truck is purchased and placed in service on January 1, 2018. Its cost is being depreciated with the straight-line method using the following facts and estimates.

Original cost	$	32,000
Expected salvage value		8,000
Useful life (years)		4

d. Two items of equipment (a sprayer and an injector) were purchased and put into service in early January 2016. They are being depreciated with the straight-line method using these facts and estimates.

	Sprayer			Injector
Original cost	$	27,000		$	18,000
Expected salvage value		3,000			2,500
Useful life (years)		8			5

e. On August 1, 2018, the company is paid $3,840 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 2.5% of the extermination services revenue of $65,760 for 2018. No warranty expense has been recorded for 2018. All costs of servicing warranties in 2018 were properly debited to the Estimated Warranty Liability account.

g. The $15,000 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, 2018.

h. The ending inventory of merchandise is counted and determined to have a cost of $11,700. Bug-Off uses a perpetual inventory system.

Required:

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 2018.

d. Depreciation expense for the two items of equipment used during year 2018.

e. The adjusted 2018 ending balances of the Extermination Services Revenue and Unearned Services Revenue accounts.

f. The adjusted 2018 ending balances of the Warranty Expense and the Estimated Warranty Liability accounts.

g. The adjusted 2018 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 4n the six-column table. Assume Bug-Offs adjusted balance for Merchandise Inventory matches the year-end physical count.

4-a. Prepare a single-step income statement for year 2018.

4-b. Prepare a statement of retained earnings (cash dividends during 2018 were $10,000) for year 2018.

4-c. Prepare a classified balance sheet as at 2018.

PHOTO ATTACHED FOR 6 COLUMN TABLE

BUG-OFF EXTERMINATORS December 31, 2018 Unadjusted Trial Balance Adjustments Debit Credit Debit Credit Adjusted Trial Balance Debit Credit Account Title Cash $ 18,000 2,500 Accounts receivable Allowance for doubtful accounts $ 814 Merchandise inventory 10,400 32,400 Trucks 0 42,000 12,600 Accum. deprec.-Trucks Equipment Accum. deprec.-Equip Accounts payable Estim. warranty liability Unearned services rev 5,500 1,300 0 Interest payable 0 Long-term notes payable 15,400 Common stock 12,000 Retained earnings 48,100 Dividends 13,000 Extermination services revenue 68,000 Interest revenue 859 Sales 56,002 44,400 Cost of goods sold Deprec. expenseTrucks Deprec. expense-Equip 0 0 Wages expense 33,000 Interest expense 0 Rent expense 8,700 Bad debts expense 0 Miscellaneous expense 1,205 Repairs expense 8,100 Utilities expense 6,870 Warranty expense 0 Totals $ 220,575 $ 220,575 $ 0 $ 0 $ 0 $ 0