Question
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,
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 | $ | 20,200 | ||||
Accounts receivable | 5,600 | |||||
Allowance for doubtful accounts | $ | 860 | ||||
Merchandise inventory | 16,500 | |||||
Trucks | 48,000 | |||||
Accum. depreciationTrucks | 0 | |||||
Equipment | 97,000 | |||||
Accum. depreciationEquipment | 25,000 | |||||
Accounts payable | 5,800 | |||||
Estimated warranty liability | 2,200 | |||||
Unearned services revenue | 0 | |||||
Interest payable | 0 | |||||
Long-term notes payable | 31,000 | |||||
Common stock | 26,000 | |||||
Retained earnings | 70,100 | |||||
Dividends | 26,000 | |||||
Extermination services revenue | 92,000 | |||||
Interest revenue | 904 | |||||
Sales (of merchandise) | 113,826 | |||||
Cost of goods sold | 51,100 | |||||
Depreciation expenseTrucks | 0 | |||||
Depreciation expenseEquipment | 0 | |||||
Wages expense | 51,000 | |||||
Interest expense | 0 | |||||
Rent expense | 25,000 | |||||
Bad debts expense | 0 | |||||
Miscellaneous expense | 1,290 | |||||
Repairs expense | 16,000 | |||||
Utilities expense | 10,000 | |||||
Warranty expense | 0 | |||||
Totals | $ | 367,690 | $ | 367,690 | ||
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 | $ | 16,700 |
Cash balance per books | 20,200 | |
Outstanding checks | 2,600 | |
Deposit in transit | 3,250 | |
Interest earned (on bank account) | 84 | |
Bank service charges (miscellaneous expense) | 31 | |
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 the statement of retained earnings (cash dividends during 2019 were $26,000) for 2019. 4c. Prepare a classified balance sheet as at 2019.
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