Comprehensive Problem 1 Comprehensive Problem Bug-Off Exterminators (Algo) 60 points 8 042:00 Book Print References 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, 2011 unadjusted Trial stance Debit Credit Cash $ 20,000 Accounts receivable Allowance for doubtful accounts $58 Merchandise Inventory 10.200 Tracks 47.000 Accumulated depreciation Trucks Equipment 50,000 Accumulated depreciation Equipent 14,5 Accounts payabis 3,15 Estimated warranty liability 2.1 Unearned services revenue Interest payable Long-ters notes payable 30.00 D. But, Capital 23, D. But, withdrawals 25. Extermination services revenue Teterest revence 2 Sales (of merchandita 1. Cost of goods told 50,00 Depreciation pence-Trucks Depreciation expensentupent was expense se. Interest experte Rent experte 20, ad debts 1.2 Miscellaneous pense Prety 1 of 1 Nord ME Graw HII o * co Tyne here to search Problem Comprehensive Problem Bug-Off Exterminators (Algo) 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 $ 20,000 Accounts receivable 34,450 Allowance for doubtful accounts $ 858 Merchandise inventory 16,200 Trucks 47,000 Accumulated depreciation-Trucks Equipment 54,000 Accumulated depreciation-Equipment 14,750 Accounts payable 5,750 Estimated warranty liability 2,150 Unearned services revenue Interest payable Long-ters notes payable 30,000 D. Buss, Capital 93,500 D. Buses, withdrawals 25,000 Extermination services revenue 98,898 Interest revenue 982 Sales (of merchandise) 109,826 Cost of goods sold 50,800 Depreciation expense-Trucks Depreciation expense-Equipment Wages expense 50,000 Totanar avar e 3 Prey 1 of 1 Next 50,000 Depreciation expense-tquipment Wages expense Interest expense Rent expense Bad debts expense Miscellaneous expense Repairs expense Utilities expense Warranty expense Totals 24,009 0 1,286 15,500 9,800 $ 348,036 $ 348,036 The following information in a through happlies 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 $ 16,600 Cash balance per books 28,000 Outstanding checks 2,550 Deposit in transit 3,280 Interest carned (on bank account) 82 Bank service charges (miscellaneous expense) Reported on the bank statement is a canceled check that the company foiled to record. Information from the bank reconciliation allows you to determine the amount of this check, which is a payment on on account payable.) 30 b. An examination of customers' accounts shows that accounts totaling $694 should be written off as uncollectible. Using on aging of receivables, the company determines that the ending balance of the Allowance for Doubtful Accounts should be $775 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 focts and estimates. c. A truck is purchased and placed in service on January 1, 2021. Its cost is being depreciated with the straigh-line method using the following facts and estimates 8 Original cost $ 47,000 Expected salvage value $ 14,000 Useful life (years) 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. Sprayer Injector Original cost $ 30,000 $ 24,00 Expected salvage value $ 3,000 $ 4,000 Useful life (years) e. On September 1, 2021, the company is paid $20,700 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 25% of the extermination services revenue of $76,200 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 9. The $30.000 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 $14700. Bug-Off uses a perpetual inventory system Required: 1. Determine amounts for the following items 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 Uneared 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 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 $25,000 and owner investments were so for 2021 4c. Prepare a classified balance sheet for December 31, 2021. Reg 1 Reg 2 Reg 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. (Do not round your intermediate calculations.) f. The adjusted 2021 ending balances of the Warranty Expense and the Estimated Warranty Liability accounts. 9. The adjusted 2021 ending balances of the Interest Expense and the Interest Payable accounts. Show less a. Reconciled balance of cash a. Omitted check b. Necessary adjustment c. Depreciation expense Sprayer Injector d. Depreciation expense Extermination Services Revenue Unearned Services Revenue e. Ending balances after adjustment Warranty Expense Estimated Warranty Liability f. Ending balances after adjustment Interest Expense Interest Payable 9. Ending balances after adjustment Prey 1 of 1 Next Reg 1 Reg 2 Reg 3 Req 4A Reg 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 9 and then completing the adjusted trial balance columns. Hint: Item b requires two adjustments. (Do not round your b intermediate calculations.) BUG-OFF EXTERMINATORS December 31, 2021 Unadjusted Trial Balance Adjustments Debit Credit Debit Credit $ 20,000 82 Account Title Adjusted Trial Balance Debit Credit Cash Accounts receivable 34,450 s 858 10.200 47,000 0 54.000 Allowance for doubtful accounts Merchandise inventory Trucks Accumulated depreciation-Trucks Equipment Accumulated depreciation Equipment Accounts payable Estimated warranty liability Unearned services revenue Interest payable Long-term notes payable D. Buggs. Capital D Buggs, Withdrawals Extermination services revenue 14.750 5.750 2.150 0 0 36.000 93.800 25.000 90.000 902 Interest revenue 0 0 30,000 Uneared services revenue Interest payable Long-term notes payable D. Buggs, Capital D. Buggs. Withdrawals Extermination services revenue 93,800 25.000 90,000 Interest revenue 902 Sales 109,826 50.800 0 Cost of goods sold Depreciation expense-Trucks Depreciation expense-Equipment Wages expense Interest expense 0 50,000 0 Rent expense 24,000 0 1.288 15.500 Bad debts expense Miscellaneous expense Repairs expense Utilities expense Warranty expense Totals 2.800 0 $ 348,038 $ 348,036 $ 82 $ O 5 Oles 0 Journal entry worksheet View transaction list Journal entry worksheet Record the estimated warranty expense. Note: Enter debits before credits. Transaction General Journal Debit Credit (1) Record entry Clear entry View general journal RO uent account nero. Do not round your intermediate calculations.) View transaction list Journal entry worksheet Record the adjustment for interest. Note: Enter debits before credits. General Journal Debit Credit Transaction (9) View general joumal Clear entry Record entry Next Req 4A Req 48 Req 4C Req 1 Req 2 Req3 Prepare a single-step income statement for 2021. ETUIG-OFF EXTERMINATORS Income Statement For Year Ended December 31, 2021 Revenues Total revenues $ 0 Expenses Total expenses 0 $ 0 tering your answers in the tabs below. Req 1 Reg 2 Reg 3 Reg 4 Reg 48 Reg 4C Prepare the statement of owner's equity (cash withdrawals during 2021 were $25,000 and owner investments were 50) for 2021. BUG OFF EXTERMINATORS Statement of Owner's Equity For Year Ended December 31, 2021 Add Investments by owner 0 0 $ Reg 1 Reg 2 Req3 Req 4A Req 40 Req 4C Prepare a classified balance sheet for December 31, 2021. (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: Total current assets 0 Plant assets 0 Total plant assets $ 0 Total assets Total assets Liabilities Current liabilities: Total current liabilities $ 0 Long-term liabilities: Total liabilities 0 Equity S 0 Total liabilities and equity Comprehensive Problem 1 Comprehensive Problem Bug-Off Exterminators (Algo) 60 points 8 042:00 Book Print References 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, 2011 unadjusted Trial stance Debit Credit Cash $ 20,000 Accounts receivable Allowance for doubtful accounts $58 Merchandise Inventory 10.200 Tracks 47.000 Accumulated depreciation Trucks Equipment 50,000 Accumulated depreciation Equipent 14,5 Accounts payabis 3,15 Estimated warranty liability 2.1 Unearned services revenue Interest payable Long-ters notes payable 30.00 D. But, Capital 23, D. But, withdrawals 25. Extermination services revenue Teterest revence 2 Sales (of merchandita 1. Cost of goods told 50,00 Depreciation pence-Trucks Depreciation expensentupent was expense se. Interest experte Rent experte 20, ad debts 1.2 Miscellaneous pense Prety 1 of 1 Nord ME Graw HII o * co Tyne here to search Problem Comprehensive Problem Bug-Off Exterminators (Algo) 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 $ 20,000 Accounts receivable 34,450 Allowance for doubtful accounts $ 858 Merchandise inventory 16,200 Trucks 47,000 Accumulated depreciation-Trucks Equipment 54,000 Accumulated depreciation-Equipment 14,750 Accounts payable 5,750 Estimated warranty liability 2,150 Unearned services revenue Interest payable Long-ters notes payable 30,000 D. Buss, Capital 93,500 D. Buses, withdrawals 25,000 Extermination services revenue 98,898 Interest revenue 982 Sales (of merchandise) 109,826 Cost of goods sold 50,800 Depreciation expense-Trucks Depreciation expense-Equipment Wages expense 50,000 Totanar avar e 3 Prey 1 of 1 Next 50,000 Depreciation expense-tquipment Wages expense Interest expense Rent expense Bad debts expense Miscellaneous expense Repairs expense Utilities expense Warranty expense Totals 24,009 0 1,286 15,500 9,800 $ 348,036 $ 348,036 The following information in a through happlies 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 $ 16,600 Cash balance per books 28,000 Outstanding checks 2,550 Deposit in transit 3,280 Interest carned (on bank account) 82 Bank service charges (miscellaneous expense) Reported on the bank statement is a canceled check that the company foiled to record. Information from the bank reconciliation allows you to determine the amount of this check, which is a payment on on account payable.) 30 b. An examination of customers' accounts shows that accounts totaling $694 should be written off as uncollectible. Using on aging of receivables, the company determines that the ending balance of the Allowance for Doubtful Accounts should be $775 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 focts and estimates. c. A truck is purchased and placed in service on January 1, 2021. Its cost is being depreciated with the straigh-line method using the following facts and estimates 8 Original cost $ 47,000 Expected salvage value $ 14,000 Useful life (years) 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. Sprayer Injector Original cost $ 30,000 $ 24,00 Expected salvage value $ 3,000 $ 4,000 Useful life (years) e. On September 1, 2021, the company is paid $20,700 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 25% of the extermination services revenue of $76,200 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 9. The $30.000 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 $14700. Bug-Off uses a perpetual inventory system Required: 1. Determine amounts for the following items 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 Uneared 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 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 $25,000 and owner investments were so for 2021 4c. Prepare a classified balance sheet for December 31, 2021. Reg 1 Reg 2 Reg 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. (Do not round your intermediate calculations.) f. The adjusted 2021 ending balances of the Warranty Expense and the Estimated Warranty Liability accounts. 9. The adjusted 2021 ending balances of the Interest Expense and the Interest Payable accounts. Show less a. Reconciled balance of cash a. Omitted check b. Necessary adjustment c. Depreciation expense Sprayer Injector d. Depreciation expense Extermination Services Revenue Unearned Services Revenue e. Ending balances after adjustment Warranty Expense Estimated Warranty Liability f. Ending balances after adjustment Interest Expense Interest Payable 9. Ending balances after adjustment Prey 1 of 1 Next Reg 1 Reg 2 Reg 3 Req 4A Reg 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 9 and then completing the adjusted trial balance columns. Hint: Item b requires two adjustments. (Do not round your b intermediate calculations.) BUG-OFF EXTERMINATORS December 31, 2021 Unadjusted Trial Balance Adjustments Debit Credit Debit Credit $ 20,000 82 Account Title Adjusted Trial Balance Debit Credit Cash Accounts receivable 34,450 s 858 10.200 47,000 0 54.000 Allowance for doubtful accounts Merchandise inventory Trucks Accumulated depreciation-Trucks Equipment Accumulated depreciation Equipment Accounts payable Estimated warranty liability Unearned services revenue Interest payable Long-term notes payable D. Buggs. Capital D Buggs, Withdrawals Extermination services revenue 14.750 5.750 2.150 0 0 36.000 93.800 25.000 90.000 902 Interest revenue 0 0 30,000 Uneared services revenue Interest payable Long-term notes payable D. Buggs, Capital D. Buggs. Withdrawals Extermination services revenue 93,800 25.000 90,000 Interest revenue 902 Sales 109,826 50.800 0 Cost of goods sold Depreciation expense-Trucks Depreciation expense-Equipment Wages expense Interest expense 0 50,000 0 Rent expense 24,000 0 1.288 15.500 Bad debts expense Miscellaneous expense Repairs expense Utilities expense Warranty expense Totals 2.800 0 $ 348,038 $ 348,036 $ 82 $ O 5 Oles 0 Journal entry worksheet View transaction list Journal entry worksheet Record the estimated warranty expense. Note: Enter debits before credits. Transaction General Journal Debit Credit (1) Record entry Clear entry View general journal RO uent account nero. Do not round your intermediate calculations.) View transaction list Journal entry worksheet Record the adjustment for interest. Note: Enter debits before credits. General Journal Debit Credit Transaction (9) View general joumal Clear entry Record entry Next Req 4A Req 48 Req 4C Req 1 Req 2 Req3 Prepare a single-step income statement for 2021. ETUIG-OFF EXTERMINATORS Income Statement For Year Ended December 31, 2021 Revenues Total revenues $ 0 Expenses Total expenses 0 $ 0 tering your answers in the tabs below. Req 1 Reg 2 Reg 3 Reg 4 Reg 48 Reg 4C Prepare the statement of owner's equity (cash withdrawals during 2021 were $25,000 and owner investments were 50) for 2021. BUG OFF EXTERMINATORS Statement of Owner's Equity For Year Ended December 31, 2021 Add Investments by owner 0 0 $ Reg 1 Reg 2 Req3 Req 4A Req 40 Req 4C Prepare a classified balance sheet for December 31, 2021. (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: Total current assets 0 Plant assets 0 Total plant assets $ 0 Total assets Total assets Liabilities Current liabilities: Total current liabilities $ 0 Long-term liabilities: Total liabilities 0 Equity S 0 Total liabilities and equity