Chapter 11, Problem 11CP

Bug-Off Exterminators provides pest control services and sells extermination products manufactured by other companies. The following six-column table contains the company's unadjusted trial balance as of December 31. 2019.

	MinrrfTTTrTB		Adjusted
December 31. 2019	Trial Balance	Adjustments	Trial Balance
Cash..........................	......... i 17.000
Accounts receivable.............	......... 4.000
Allowance for doubtful accounts ..	........ S 82B
Merchandise inventory...........	......... 11,700
Trucks.........................	..... 32J0OO
Accum. depreciation—Trucks......	......... 0
Equipment.....................	......... 45J0OO
Accum. depreciation—Equipment .	........ 12.200
Accounts payable...............	........ 5.000
Estimated warranty liability........	........ 1.400
Unearned services revenue.......	......... 0
Interest payable.................	......... 0
Long-term notes payable.........	........ 15,000
D. Buggs,Capital................	......... 59,700
D. Buggs, Withdrawals...........	......... 10,000
Extermination services revenue____	........ 60.000
Interest revenue................	........ 872
Sales (of merchandise)...........	......... 71.026
Cost of goods sold...............	......... 46.300
Depreciation expense—Trucks	......... 0
Depreciation expense—Equipment	......... 0
Wages expense.................	......... 35,000
Interest expense................	......... 0
Rent expense...................	......... 9,000
Bad debts expense..............	........ 0
Miscellaneous expense...........	........ 1,226
Repairs expense................	......... a.ooo
Utilities expense................	......... 6.B00
Warranly expense...............	......... 0
Totals.........................	......... S226.026 $226,026
The following information in a through h ap	iplies to the company at the end of the current	year.	-
3. The bank reconciliation as of December 31. 2019. includes the following facts.
Cash balance per bank..............	$15,100 Deposit in transit...............	........... $2,450

Cash balance per books.............. 17.000 Interest earned (on bank account}.................. 52
Outstanding checks................. 1.800 Bankservicecharges(mrscellaneousexpense)....... 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 S679 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 S700.
C. A truck is purchased and placed in service on January 1₌ 2019. Its cost is being depreciated with the straight-line method using the following facts and estimates.
Original cost....... J32.000 Expected salvage value......... SE.000 Useful life (years)........ 4