Bug-Off Exterminators provides pest control services and sells extermination pro
ID: 2475277 • Letter: B
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, 2013.
The following information in a through h applies to the company at the end of the current year.
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.)
An examination of customers’ accounts shows that accounts totaling $667 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 $713.
A truck is purchased and placed in service on January 1, 2013. Its cost is being depreciated with the straight-line method using the following facts and estimates.
Two items of equipment (a sprayer and an injector) were purchased and put into service in early January 2011. They are being depreciated with the straight-line method using these facts and estimates.
On August 1, 2013, the company is paid $4,920 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.
The company offers a warranty for the services it sells. The expected cost of providing warranty service is 1.5% of the extermination services revenue of $56,160 for 2013. No warranty expense has been recorded for 2013. All costs of servicing warranties in 2013 were properly debited to the Estimated Warranty Liability account.
The $13,200 long-term note is an 9%, 5-year, interest-bearing note with interest payable annually on December 31. The note was signed with First National Bank on December 31, 2013.
The ending inventory of merchandise is counted and determined to have a cost of $12,300. Bug-Off uses a perpetual inventory system.
Use the preceding information to determine amounts for the following items.
Correct (reconciled) ending balance of Cash, and the amount of the omitted check.
Reconicled blance:
Omiited check:
b. Adjustment needed to obtain the correct ending balance of the Allowance for Doubtful Accounts.
Neccessary adjustment:
Depreciation expense for the truck used during year 2013.
Depreciation expense for the two items of equipment used during year 2013.
The adjusted 2013 ending balances of the Extermination Services Revenue and Unearned Services Revenue accounts. (Do not round your intermediate calculations.)
The adjusted 2013 ending balances of the accounts for Warranty Expense and Estimated Warranty Liability.
The adjusted 2013 ending balances of the accounts for Interest Expense and Interest Payable.
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.)
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. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Do not round your intermediate calculations.) Adjustments and adjustment trail balance. debit and credit
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, 2013.
Explanation / Answer
Answer a. Cash Balance According to bank statement 14,700 Outstanding Checks (1,810) Deposit in Transit 2,290 Bank Balance after Reconcilation 15,180 Cash balance accordibg to Company's record 17,500 Interest Earned 43 Bank Charges (15) Chq Cancelled - Not recorded (Bal Fig) (2,348) Company Balance per Reconcilation 15,180 Answer b. Adjustment needed to obtain the correct ending balance of the Allowance for Doubtful Accounts. 566 Allowance for Doubtful Accounts Particulars Amount Particulars Amount To Accounts Receivables 667 By Balance b/f 814 (Amount Uncollectible) To Balance c/f 713 By Bad Debts ( Bal. Fig.) 566 1380 1380 Answer c. Calculation of Dep. Exp. For Truck in 2013 Orginal Cost 30,900 Salvage Value 6,300 Useful Life in Years 4 Dep. Under Straight Line Method for 2013 6,150 (30900 - 6300) / 4 Years Answer d. Calculation of Depreciation Exp. - Two Items of Equipment Sparyer Injector Original Cost 27,740 18,700 Salvage Value 3,500 2,400 Useful Life in Years 8 5 Dep. Under Straight Line in 2013 3,030 3,260 Sprayer - (27740 - 3500) / 8 Years Injector - (18700 - 2400) / 5 Years As per Chegg Guidelines, we can answer only one question at a time having four subparts. For other parts please ask it again.
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