I agree with Sophie, it's possible to get ammonia in your tap water especially if it contains chloramines, which judging by your water report you do (it's under total chlorine).
Your calculation looks fine.
During cycling you only need to be concerned with ammonia and nitrite. It's useful to test your tap water for nitrates so you know how many you're starting with and you've already tested your pH. You needn't be concerned with nitrates or pH again unless your cycle is taking a long time and in danger of stalling. Just follow the cycling link at the top of the page and test when it tells you to, you'll be fine!
Don't worry about bubbles in the substrate, they won't do any harm at all. Toxic gas in the substrate is caused by bacterial waste gas and not air pockets.