Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Question
Chapter 7, Problem 7.5DMP
To determine
Internal control
The internal control refers to the plan of a company. Implementation of effective internal
Thus, internal control helps:
- To promote the operational efficiency.
- To encourage company policies and procedures regarding adherence.
- To minimize the errors and theft happening in the company.
- To enhance the accuracy and reliability of the accounting data.
To indicate: The apparent internal control weaknesses for each of the following independent situations and also suggest alternative procedures to eliminate the weakness.
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QUESTION 7
P8.3A
P8.3A (LO 2) Kael Company maintains a petty cash fund for small expenditures.
These transactions occurred during the month of August.
Journalize and post petty cash fund transactions.
Aug. 1 Established the petty cash fund by writing a check payable to the petty
cash custodian for $200.
15
Replenished the petty cash fund by writing a check for $175. On this date,
the fund consisted of $25 in cash and these petty cash receipts: freight-out
$74.40, entertainment expense $36, postage expense $33.70, and
miscellaneous expense $27.50.
16
Increased the amount of the petty cash fund to $400 by writing a check for
$200.
Replenished the petty cash fund by writing a check for $283. On this date,
the fund consisted of $117 in cash and these petty cash receipts: postage
expense $145, entertainment expense $90.60, and freight-out $46.40.
31
Instructions
a. Journalize the petty cash transactions.
b. Post to the Petty Cash account.
c. What internal control features exist in a petty…
7LO 3Bank reconciliation Prepare a bank reconciliation as of October 31 from the following information:a. The October 31 cash balance in the general ledger is $1,688.b. The October 31 balance shown on the bank statement is $746.c. Checks issued but not returned with the bank statement were No. 462 for $26 and No. 483 for $100.d. A deposit made late on October 31 for $900 is included in the general ledger balance but not in the bank statement balance.e. Returned with the bank statement was a notice that a customer’s check for $150 that was deposited on October 25 had been returned because the customer’s account was overdrawn.f. During a review of the checks that were returned with the bank statement, it was noted that the amount of Check No. 471 was $64 but that in the company’s records supporting the general ledger balance, the check had been erroneously recorded as a payment of an account payable in the amount of $46.
QS 6-4 Internal control for cash LO P1
Identify each of the following statements as either true or false.
a. A good internal control is to require that all cash receipts be deposited daily.
Good internal control for cash is to require all cash payments be made by check. An exception is small payments made from petty
b
cash.
c. A petty cash system of control is a system used only for cash receipts.
d. A guideline for safeguarding cash is that all cash receipts be deposited monthly or yearly.
Chapter 7 Solutions
Intermediate Accounting, 10 Ed
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - Prob. 7.3QCh. 7 - Prob. 7.4QCh. 7 - Prob. 7.5QCh. 7 - Prob. 7.6QCh. 7 - Prob. 7.7QCh. 7 - Distinguish between the gross and net methods of...Ch. 7 - Briefly explain the accounting treatment for sales...Ch. 7 - Explain the typical way companies account for...
Ch. 7 - Prob. 7.11QCh. 7 - Prob. 7.12QCh. 7 - Briefly explain the difference between the income...Ch. 7 - Prob. 7.14QCh. 7 - Is any special accounting treatment required for...Ch. 7 - Explain any possible differences between...Ch. 7 - Prob. 7.17QCh. 7 - What is meant by the discounting of a note...Ch. 7 - What are the key variables that influence a...Ch. 7 - Prob. 7.20QCh. 7 - Prob. 7.21QCh. 7 - (Based on Appendix 7B) Marshall Companies, Inc.,...Ch. 7 - Prob. 7.1BECh. 7 - Prob. 7.2BECh. 7 - Prob. 7.3BECh. 7 - Prob. 7.8BECh. 7 - Prob. 7.9BECh. 7 - Prob. 7.10BECh. 7 - Prob. 7.11BECh. 7 - Prob. 7.12BECh. 7 - Prob. 7.13BECh. 7 - Uncollectible accounts; balance sheet approach ...Ch. 7 - Uncollectible accounts; solving for unknown LO75,...Ch. 7 - Prob. 7.16BECh. 7 - Note receivable LO77 On December 1, 2018,...Ch. 7 - Long-term notes receivable LO74 On April 19,...Ch. 7 - Prob. 7.19BECh. 7 - Factoring of accounts receivable LO78 Refer to...Ch. 7 - Prob. 7.21BECh. 7 - Discounting a note LO78 On March 31, Dower...Ch. 7 - Receivables turnover LO78 Camden Hardwares credit...Ch. 7 - Prob. 7.24BECh. 7 - Prob. 7.25BECh. 7 - Prob. 7.26BECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.9ECh. 7 - Prob. 7.10ECh. 7 - Prob. 7.12ECh. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Prob. 7.17ECh. 7 - Prob. 7.23ECh. 7 - Factoring of accounts receivable with recourse ...Ch. 7 - Factoring of accounts receivable with recourse...Ch. 7 - Concepts; terminology LO71 through LO78 Listed...Ch. 7 - Prob. 7.29ECh. 7 - Prob. 7.36ECh. 7 - Prob. 7.1PCh. 7 - Prob. 7.2PCh. 7 - Prob. 7.3PCh. 7 - Prob. 7.5PCh. 7 - Prob. 7.1DMPCh. 7 - Real World Case 74 Sales returns; Green Mountain...Ch. 7 - Ethics Case 75 Uncollectible accounts LO75 You...Ch. 7 - Prob. 7.5DMPCh. 7 - Prob. 7.6DMPCh. 7 - Prob. 7.9DMP
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- Required information Problem 8-4A Preparing a bank reconciliation and recording adjustments LO P3 [The following information applies to the questions displayed below.] The following information is available to reconcile Branch Company's book balance of cash with its bank statement cash balance as of July 31. a. On July 31, the company's Cash account has a $25,677 debit balance, but its July bank statement shows a $27,364 cash balance. b. Check No. 3031 for $1,240, Check No. 3065 for $396, and Check No. 3069 for $2,008 are outstanding checks as of July 31. c. Check No. 3056 for July rent expense was correctly written and drawn for $1,280 but was erroneously entered in the accounting records as $1,270. d. The July bank statement shows the bank collected $6,500 cash on a note for Branch. Branch had not recorded this event before receiving the statement. e. The bank statement shows an $805 NSF check. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this…arrow_forwardQS 6-4 Internal control for cash LO P1 Identify each of the following statements as either true or false. a. It is good internal control for the recordkeeper to be in charge of writing and signing checks when the owner is out of town. b. A petty cash system of control is a system used only for cash receipts. c. A good internal control is to require that all cash receipts be deposited daily. d. To reduce theft, the salesclerk should not have access to the accounting records for cash sales. MacBook Airarrow_forwardRequired information Problem 8-4A Preparing a bank reconciliation and recording adjustments LO P3 Skip to question [The following information applies to the questions displayed below.] The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31. On July 31, the company’s Cash account has a $25,239 debit balance, but its July bank statement shows a $26,547 cash balance. Check No. 3031 for $1,090, Check No. 3065 for $321, and Check No. 3069 for $1,858 are outstanding checks as of July 31. Check No. 3056 for July rent expense was correctly written and drawn for $1,250 but was erroneously entered in the accounting records as $1,240. The July bank statement shows the bank collected $9,000 cash on a note for Branch. Branch had not recorded this event before receiving the statement. The bank statement shows an $805 NSF check. The check had been received from a customer, Evan Shaw. Branch has not yet…arrow_forward
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