Chapter 11 Comprehensive Problem Bug-Off ... - MyWeb at WIT

Chapter 11 Comprehensive Problem
Bug-Off Exterminators
Part 1
(a)
Bank Book
Beginning Balance: 16,100 Beginning Balance: 18,000
Add: 1,450 Add: 52
Deduct: 1,800 Deduct: 15
Ending Balance: 15,750 Ending Balance: 18,037
18,037
-15,750
2,287 Amount of canceled check
Required: 15,750(ending cash balance); 2,287(amount of reconciled check).
(b) Unadjusted balance928 uncollectible779
Ending balance 800 128
128 651Adjustment
Required: 651 credit to allowance for doubtful accounts.
(c) Cost 40,000 35,000
Salvage - 5,000 5 years
35,000 net realizable value =7,000Depreciation Expense/Year
Required: 7,000 (depreciation expense for truck)
(d) Sprayer
Cost 35,000 32,000
Salvage - 3,000 8 years
32,000 net realizable value =4,000Depreciation Expense/Year
Injector
Cost 20,000 16,000
Salvage - 4,000 5 years
16,000 net realizable value =3,200Depreciation Expense/Year
Total equipment depreciation expense: $7,200
Required: 7,200 (total equipment depreciation.)
(e) one year’s service7,680
0ne year 12 months
= 640/month
5 months earned (Aug, sept, Oct, Nov, dec)
5 months X 640/month=3,200 earned for the year
Previously credited to extermination services revenue7,680

Revenue earned this year3,200
Debit to earned revenue and unearned revenue4,480
Required: Extermination Services Revenue ending balance: 65,520
Unearned Services ending balance: 4,480
(f) Services revenue65,000
X 2.5%
1,638 warranty expense
Required: Ending balances for the estimated warranty liability and warranty expense:
3,038.
(g) No adjustment required