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 $ 21,000 51,800 $ 868 17,700 52,000 0 57,000 15,600 6,000 2,400 0 0 35,000 105,300 30,000 Cash Accounts receivable 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 Interest revenue Sales (of merchandise) Cost 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 100,000 912 129,826 52,300 0 0 0 55,000 0 29,000 0 0 1,306 18,000 10,800 0 0 $ 395,906 $ 395,906 a. The bank reconciliation as of December 31, 2021, 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) $ 17,100 21,000 2,800 3,450 92 35 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 $699 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 $800. 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 facts and estimates. Original cost Expected salvage value Useful life (years) $ 52,000 $ 16,000 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 $ 31,000 $ 26,000 Expected salvage value $ 3,000 $ 4,500 Useful life (years) 8 5 e. On September 1, 2021, the company is paid $26,700 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 2.5% of the extermination services revenue of $82,200 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. g. The $35,000 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. 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 Unearned 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 g and then completing the adjusted tria 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 $30,000 and owner investments were $0) for 2021. 4c. Prepare a classified balance sheet for December 31, 2021. Reg 1 Reg 2 Reg 3 Req 4A Reg 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 $ 17,100 a. Omitted check $ 3,000 b. Necessary adjustment c. Depreciation expense Sprayer Injector d. Depreciation expense Extermination Services Revenue Uneamed Services Revenue e. Ending balances after adjustment Warranty Expense Estimated Warranty Liability t. Ending balances after adjustment Interest Expense Interest Payable g. Ending balances after adjustment Req 1 Req 2 Req 3 Req 4A Req 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 g and then completing the adjusted trial balance columns. Hint: Item b requires two adjustments. (Do not round your intermediate calculations.) BUG-OFF EXTERMINATORS December 31, 2021 Unadjusted Trial Balance Adjustments Adjusted Trial Balance Account Title Debit Credit Debit Credit Debit Credit Cash $ 21,000 Accounts receivable 51,800 Allowance for doubtful accounts $ 868 Merchandise inventory 17,700 Trucks 52,000 Accumulated depreciation-Trucks 0 Equipment 57,000 Accumulated depreciation-Equipment 15,600 Accounts payable 6,000 Estimated warranty liability 2,400 Unearned services revenue 0 Interest payable 0 Long-term notes payable 35,000 D. Buggs, Capital 105,300 D. Buggs, Withdrawals 30,000 Extermination services revenue 100,000 Interest revenue 912 Sales 129,826 Cost of goods sold 52,300 Depreciation expense-Trucks 0 Depreciation expense-Equipment 0 Wages expense 55,000 Interest expense 0 Rent expense 29,000 Bad debts expense 0 Miscellaneous expense 1,306 Repairs expense 18,000 Utilities expense 10,800 Warranty expense 0 Totals $ 395,906 $ 395,906 $ 0 $ 0 $ 0 $ 0 No Transaction General Journal Debit Credit 1 (a) Miscellaneous expenses Accounts payable Interest expense Cash 2 (61) Allowance for doubtful accounts 3 (62) Bad debts expense > Allowance for doubtful accounts 4 (c) Depreciation expense-Trucks Accumulated depreciationTrucks 5 (d) Depreciation expense-Equipment Accumulated depreciation Equipment 6 (e) Extermination services revenue Unearned services revenue 7 (f) Warranty expense Estimated warranty liability 8 (9) No journal entry required BUG-OFF EXTERMINATORS Income Statement For Year Ended December 31, 2021 Revenues Extermination services revenue Sales Interest revenue Total revenues $ 0 Expenses Cost of goods sold Depreciation expense-Trucks Depreciation expense-Equipment Wages expense Interest expense x Rent expense Bad debts expense Miscellaneous expenses Repairs expense Utilities expense Warranty expense Total expenses 0 Net income ON IS 0 Req 1 Req 2 Reg 3 Req 4A Req 4B Req 4C Prepare a classified balance sheet for December 31, 2021. (Amounts to be deducted should be indicated with a minus sign. Do n intermediate calculations.) BUG-OFF EXTERMINATORS Balance Sheet December 31, 2021 Assets Current assets: Cash Accounts receivable Merchandise inventory 0 Total current assets 0 Plant assets: Trucks Accumulated depreciationTrucks 0 Equipment Accumulated depreciation-Equipment 0 Total plant assets 0 Total assets $ 0 Liabilities Current liabilities: Accounts payable $ 6,000 Estimated warranty liability Unearned services revenue Total current liabilities $ 6,000 Long-term liabilities: Long-term notes payable 35,000 Total liabilities 41,000 Equity Cost of goods sold Total liabilities and equity $ 41,000