Cash BUG-OFF EXTERMINATORS December 31, 2018 Unadjusted Trial Balance $ 16,800 Accounts receivable Allowance for doubtful accounts Merchandise inventory Trucks 2,600 $ 813 10,800 31,400 Accum. depreciation-Trucks 0 Equipment 54,000 Accum. depreciation-Equipment 14,000 Accounts payable 5,700 Estimated warranty liability 1,400 Unearned services revenue 0 Interest payable Long-term notes payable 16,000 Common stock 12,000 Retained earnings 47,900 Dividends 13,000 Extermination services revenue 42,000 Interest revenue 882 Sales (of merchandise) 93,866 Cost of goods sold 44,500 Rent expense Depreciation expense-Trucks Depreciation expense-Equipment Wages expense Interest expense Bad debts expense Miscellaneous expense Repairs expense Utilities expense 0 36,000 8,900 0 1,201 8,600 6,760 Warranty expense 0 Totals $234,561 $234,561 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 Cash balance per books Outstanding checks Deposit in transit Interest earned (on bank account) Bank service charges (miscellaneous expense) $ 15,100 17,000 1,800 2,450 52 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 Expected salvage value Useful life (years) $32,000 8,000 4 d Two itome of equipment (a sprayer and an injected were purchased and put into service in early January 2016. They are being Saved Help Save & Exit 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. Original cost Expected salvage value Useful Life (years) Sprayer Injector $27,000 $18,000 3,000 2,500 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 $39,760 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. Check Req 1 Req 2 Req 3 Req 4A Req 48 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 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. 9. The adjusted 2018 ending balances of the Interest Expense and the Interest Payable accounts. (Round amounts to nearest whole dollar.) a. Reconciled balance Omitted check b. Necessary adjustment c. Depreciation expense d. Depreciation-Sprayer Depreciation-Injector e. Services revenue Unearned services revenue Warranty expense Estimated warranty liability g Interest expense Interest payable Show less & December 31, 2018 Adjusted Trial Balance Unadjusted Adjustments Trial Balance Account Title Debit Credit Debit Credit Debit Cash $ 16,800 Accounts receivable 2,600 Allowance for doubtful accounts $ 813 Merchandise inventory 10,800 Trucks 31,400 Accum, deprec-Trucks Equipment 54,000 Accum, deprec.-Equip 14,000 Accounts payable 5,700 Estim. warranty liability 1,400 Unearned services rev 0 Interest payable 0 Long-term notes payable 16,000 Common stock 12,000 Retained earnings 47,900 Dividends 13,000 Extermination services revenue 42.000 Interest revenue Sales Cost of goods sold 44,500 Deorec expense-Trucks 0 882 93,866 Credit Prepare a single-step income statement for year 2018. BUG-OFF EXTERMINATORS Income Statement For Year Ended December 31, 2018 Revenues Total revenues Expenses + Ces Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 4B Req 4C Prepare a statement of retained earnings (cash dividends during 2018 were $10,000) for year 2018. BUG-OFF EXTERMINATORS Statement of Retained Earnings For Year Ended December 31, 2018 Retained earnings, December 31, 2017 Retained earnings, December 31, 2018 < Req 4A Req 4C>