University:
Grand Rapids Community College
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

246

Pages:

2
Author:

stud_ice13

Part 1: Adjustments for Bug-Off Exterminators Based on the information provided for Bug-Off Exterminators, we need to adjust several accounts. Here’s a summary: 1. Bank Reconciliation and Omitted Check o Reconciled cash balance: $15,750 o Determine the amount of the omitted check from the bank reconciliation data provided. 2. Allowance for Doubtful Accounts o Total accounts written off as uncollectible: $679. o Desired ending balance for the Allowance for Doubtful Accounts: $700. o Adjustment needed to achieve a $700 ending balance after writing off the uncollectible accounts. 3. Depreciation Expense for Truck o Using straight-line depreciation based on given cost, useful life, and salvage value, calculate depreciation for the truck purchased at the start of 2021. 4. Depreciation for Equipment o Calculate depreciation for two items of equipment (the sprayer and injector) bought in 2019 using the straight-line method. 5. Revenue Adjustment for Unearned Service Revenue o $3,840 was prepaid for a one-year service contract starting in August. o Adjust for the revenue earned through December 31, 2021. 6. Warranty Expense and Liability o 2021 extermination revenue: $57,760. o Expected warranty cost: 2.5% of revenue. o Adjust for warranty expenses if not already recorded. 7. Interest on Long-Term Note o Annual interest on the $15,000 note at 8% signed on December 31, 2021, should be recorded to adjust the Interest Expense and Interest Payable. Part 2: Six-Column Trial Balance Using the above adjustments, fill out the Adjusted Trial Balance columns. Make sure to enter each adjustment, and check that the trial balance totals $238,207. Part 3: Journal Entries for Adjustments Create journal entries for each of the adjustments from Part 1: 1. Bank Reconciliation Adjustment (Record omitted check and reconcile cash balance). 2. Allowance for Doubtful Accounts Adjustment (Bad Debt Expense). 3. Depreciation for Truck and Equipment. 4. Revenue Adjustment for Unearned Services. 5. Warranty Expense Adjustment. 6. Interest Expense Adjustment. Part 4: Financial Statements Prepare the following based on the adjusted balances: 1. Single-Step Income Statement: Include all revenues and expenses. 2. Statement of Retained Earnings: Start with beginning retained earnings, add net income, and subtract dividends ($10,000 for 2021). 3. Classified Balance Sheet: Present assets, liabilities, and equity, ensuring Total Assets = $82,771. Discussion and Analysis For ethical scenarios and analysis questions (like warranty estimates), consider the implications of conservative estimates and whether these align with GAAP. Use reasonable assumptions based on warranty history or expected industry standards. This summary should provide a clear roadmap to complete each part of the assignment.