Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Chapter 4, Problem 4.52DC
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To prepare:
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1. During the preparation of a bank reconciliation, the assistant controller discovered that the Bank incorrectly recorded a $3290 check as $329. The controller has decided not to notify the bank but wait for the bank to detect the error. The controller plans to record the $2961 error as "Other Income" if the Bank fails to detect the error within the next three months. Please discuss whether the controller is behaving in an ethical manner.
2. How are cash equivalents reported in the financial statements? Please list two examples of cash equivalents.
You are conducting an audit of the MART CORPORATION for the year ended December 31, 2018. The internal control procedures surrounding cash transactions were not adequate. Jane Quipit, the bookkeeper-cashier handles cash receipts, maintains accounting records and prepares the monthly reconciliations of the bank account. She prepared the following reconciliation at the end of the year:
Balance per bank statement P 315,000
Add : Deposit in transit P 157,725
Note collected by bank 13,500 171,225
Balance P 486,225
Less : Outstanding checks 222,075
Balance per general ledger P 264,150
In the process of your audit, you gathered the following:
At December 31, 2018, the bank statement and the general ledger showed balances of P315,000 and P264,150 respectively.
The cut off bank statement showed a bank charge on January 02, 2019 for P35,250 representing a correction of an erroneous bank credit.
Included in the list of outstanding checks were the following:
A check payable to a…
You are the auditor for Konerko’s Office Supply Store, which is opening for business next week. The store owner has established all the controls you have recommended for ensuring that sales are recorded properly and cash is accounted for. The owner has heard from other small business owners that employees often used returned goods as means of skimming money from the register.
a. How might an employee use returned goods to skim money from the register?
b. What controls would you recommend to prevent or detect fraudulent returns?
c. What audit procedures might you perform to detect fraudulent returns?
Chapter 4 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 4 - Prob. 1QCCh. 4 - Prob. 2QCCh. 4 - Prob. 3QCCh. 4 - Prob. 4QCCh. 4 - Prob. 5QCCh. 4 - Prob. 6QCCh. 4 - Prob. 7QCCh. 4 - Why does cash require some specific internal...Ch. 4 - Prob. 9QCCh. 4 - Prob. 10QC
Ch. 4 - Prob. 11QCCh. 4 - Prob. 12QCCh. 4 - Prob. 4.1ECCh. 4 - Prob. 4.1SCh. 4 - Prob. 4.2SCh. 4 - (Learning Objective 2: Describe objectives and...Ch. 4 - Prob. 4.4SCh. 4 - (Learning Objective 2: Explain the objectives and...Ch. 4 - (Learning Objective 3: Evalue internal controls...Ch. 4 - Prob. 4.7SCh. 4 - Prob. 4.8SCh. 4 - Prob. 4.9SCh. 4 - Prob. 4.10SCh. 4 - Prob. 4.11SCh. 4 - Prob. 4.12SCh. 4 - Prob. 4.13SCh. 4 - Prob. 4.14SCh. 4 - Prob. 4.15AECh. 4 - Prob. 4.16AECh. 4 - Prob. 4.17AECh. 4 - Prob. 4.18AECh. 4 - Prob. 4.19AECh. 4 - Prob. 4.20AECh. 4 - Prob. 4.21AECh. 4 - Prob. 4.22BECh. 4 - Prob. 4.23BECh. 4 - Prob. 4.24BECh. 4 - (Learning Objectives 1, 2, 3: Describe fraud and...Ch. 4 - Prob. 4.26BECh. 4 - Prob. 4.27BECh. 4 - Prob. 4.28BECh. 4 - Prob. 4.29QCh. 4 - Prob. 4.30QCh. 4 - Prob. 4.31QCh. 4 - Prob. 4.32QCh. 4 - Prob. 4.33QCh. 4 - Prob. 4.34QCh. 4 - Prob. 4.35QCh. 4 - Prob. 4.36QCh. 4 - Prob. 4.37QCh. 4 - Prob. 4.38QCh. 4 - Prob. 4.39QCh. 4 - Prob. 4.40QCh. 4 - Prob. 4.41APCh. 4 - Prob. 4.42APCh. 4 - Prob. 4.43APCh. 4 - Prob. 4.44APCh. 4 - Prob. 4.45BPCh. 4 - (Learning Objectives 2, 3: Explain the objectives...Ch. 4 - (Learning Objective 3: Evaluate internal controls)...Ch. 4 - Prob. 4.48BPCh. 4 - Prob. 4.49CEPCh. 4 - Prob. 4.50CEPCh. 4 - Prob. 4.51SCCh. 4 - Prob. 4.52DCCh. 4 - Prob. 4.53DCCh. 4 - Prob. 4.54EICCh. 4 - Prob. 1FFCh. 4 - Prob. 1FA
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- You are the auditor for Konerko’s Office Supply Store, which is opening for business next week. The store owner has established all the controls you have recommended for ensuring that sales are recorded properly and cash is accounted for. The owner has heard from other small business owners that employees often used returned goods as means of skimming money from the register.Required:a. How might an employee use returned goods to skim money from the register?b. What controls would you recommend to prevent or detect fraudulent returns?c. What audit procedures might you perform to detect fraudulent returns?arrow_forwardYou are auditing general cash for the Tampa Supply Company for the fiscal year ended March 31, 2019. The client has not prepared the March 31 bank reconciliation. After a brief discussion with the owner, you agree to prepare the reconciliation, with assistance from one of Tampa Supply's clerks. General Ledger Bank Statement Beginning balance 3/1/19 7,637 9,513 Deposits 25,336 Cash receipts journal 26,512 Checks cleared (25,629) Cash disbursements journal (23,824) March bank service charge (75) Note paid directly (4,500) NSF check (2,071) Ending balance 3/31/19 10,325 2,574 Balance per bank 9,513 Deposits in transit 620 Outstanding checks 2,496 Balance per books 7,637 1. Checks clearing that were outstanding on February 28 totaled $2,477. 2. Checks clearing that were recorded in the Marchdisbursements journal totaled $21,205. 3. Deposits included $620 from…arrow_forwardPlease help me with this problem. Answer requirement (a) and (b). During the audit of Sunset Building Supply, you are given the following year-end bank reconciliation prepared by the client: Balance per 12/31 bank statement: $97,468 Add: Deposits in transit: $8,934 Total $106,402 Less: Checks Outstanding $41,516 Balance Per Ledger, 12/31 $64,886 According to the client’s accounting records, checks totaling $62, 964 were issued between January 1 and January 14 of the following year. You have obtained a cutoff bank statement dated January 14 containing paid checks amounting to $100,880. Of the checks outstanding at December 31, checks totaling $7,200 were not returned in the cutoff statement, and of those issued per the accounting records in January, checks totaling $16,400 were not returned. Required: a. Prepare a working paper comparing (1) the total of all checks returned by the bank or still outstanding with (2)…arrow_forward
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