The procedures used for over-the-counter receipts are as follows: At the close of each day’s business, the salesclerks count the cash in their respective cash drawers, after which they determine the amount recorded by the cash register and prepare the memo cash form, noting any discrepancies. An employee from the cashier’s office counts the cash, compares the total with the memo, and takes the cash to the cashier’s office. a. Indicate the weak link in internal control. b. How can the weakness be corrected?
> List any errors you can find in the following partial balance sheet: Napa Vino Company Balance Sheet December 31, 20Y9 Assets Current assets: Cash Notes receivable Less interest receivable Accounts receivable $ 78,500 $ 300,000 4,500 $1,200,000 11,5
> Equipment acquired on January 6 at a cost of $375,000 has an estimated useful life of 20 years and an estimated residual value of $25,000. a. What was the annual amount of depreciation for the Years 1–3 using the straight-line method of depreciation? b.
> Journalize the following transactions in the accounts of Safari Games Co., which operates a riverboat casino: Apr. 18. Received a $60,000, 30-day, 7% note dated April 18 from Glenn Cross on account. 30. Received a $42,000, 60-day, 8% note dated April 30
> Journalize the following transactions of Trapper Jon’s Productions: June 23. Received a $48,000, 90-day, 8% note dated June 23 from Radon Express Co. on account. Sept. 21. The note is dishonored by Radon Express Co. Oct. 21. Received the amount due on th
> The following selected transactions were completed by Fasteners Inc. Co., a supplier of buttons and zippers for clothing: 20Y3 Nov. 21. Received from McKenna Outer Wear Co., on account, a $96,000, 60-day, 3% note dated November 21 in settlement of a past
> The series of five transactions recorded in the following T accounts were related to a sale to a customer on account and the receipt of the amount owed. Briefly describe each transaction. Notes Receivable 75,000 | (d) Cash (e) 76,500 (c) 75,000 Cost
> Spring Designs & Decorators issued a 120-day, 4% note for $60,000, dated April 13 to Jaffe Furniture Company on account. a. Determine the due date of the note. b. Determine the maturity value of the note. c. Journalize the entries to record the following
> Determine the due date and the amount of interest due at maturity on the following notes: Date of Note Face Amount Interest Rate Term of Note January 10* $40,000 5% 90 days 180 days 30 days а. b. March 19 18,000 8. C. June 5 90,000 7 d. September 8
> Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31: Customer __________Amount Kim Abel …………â€&brvb
> Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: Customer __________Amount Shawn Brooke ………………….. $ 4,650 Eve Denton ……………………….… 5,180 Art Malloy …………………………. 11,050 Cas
> Using the data in Exercise 9-15, assume that during the second year of operations, Mack’s Plumbing Supply Co. had sales of $4,100,000, wrote off $34,000 of accounts as uncollectible using the direct write-off method, and reported net income of $600,000.
> During its first year of operations, Mack’s Plumbing Supply Co. had sales of $3,250,000, wrote off $27,800 of accounts as uncollectible using the direct write-off method, and reported net income of $487,500. Determine what the net income would have been
> Equipment acquired on January 8 at a cost of $168,000 has an estimated useful life of 18 years, has an estimated residual value of $15,000, and is depreciated by the straight-line method. a. What was the book value of the equipment at December 31 the end
> The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31: June 8. Wrote off account of Kathy Quantel, $8,440. Aug. 14. Received $3,000 as partial payment on the $12,500 account of Rosalie Oa
> The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31: Apr. 13. Wrote off account of Dean Sheppard, $8,450. May 15. Received $500 as partial payment on the $7,100 accoun
> Using the data in Exercise 9-11, assume that the allowance for doubtful accounts for Performance Bike Co. had a debit balance of $28,400 as of December 31. In Exercise 9-11 Performance Bike Co. is a wholesaler of motorcycle supplies. An aging of the com
> Performance Bike Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31 and a historical analysis of the percentage of uncollectible accounts in each age category are as follows: Estim
> Using data in Exercise 9-9, assume that the allowance for doubtful accounts for Kirchhoff Industries has a credit balance of $10,112 before adjustment on August 31. Journalize the adjusting entry for uncollectible accounts as of August 31. In Exercise 9
> Kirchhoff Industries has a past history of uncollectible accounts, as follows. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule you completed in Exercise 9-8. Age Class ______________Percent Uncollectible Not past
> The accounts receivable clerk for Kirchhoff Industries prepared the following partially completed aging of receivables schedule as of the end of business on August 31: The following accounts were unintentionally omitted from the aging schedule and not
> Toot Auto Supply distributes new and used automobile parts to local dealers throughout the Midwest. Toot’s credit terms are n/30. As of the end of business on October 31, the following accounts receivable were past due: Determine the
> At the end of the current year, the accounts receivable account has a debit balance of $6,800,000 and sales for the year total $81,500,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following assumptio
> Quantum Solutions Company, a computer consulting firm, has decided to write off the $33,550 balance of an account owed by a customer, Alliance Inc. Journalize the entry to record the write-off, assuming that (a) The direct write-off method is used and (b
> Willow Creek Company purchased and installed carpet in its new general offices on April 30 for a total cost of $18,000. The carpet is estimated to have a 15-year useful life and no residual value. a. Prepare the journal entry necessary for recording the
> Journalize the following transactions in the accounts of Sedona Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables: May 1. Sold merchandise on account to Beijing Palace Co., $18,900.
> Journalize the following transactions in the accounts of Champion Medical Co., a medical equipment company that uses the direct write-off method of accounting for uncollectible receivables: Jan. 19. Sold merchandise on account to Dr. Dale Van Dyken, $30,
> After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $673,400 and Allowance for Doubtful Accounts has a balance of $11,900. Describe how the accounts receivable and the allowance for doubtful acco
> The note receivable dishonored in Discussion Question 9 is paid on December 30 by the maker, plus interest for 30 days at 9%. What entry should be made to record the receipt of the payment? In Discussion Question 9 The maker of a $240,000, 6%, 90-day no
> If a note provides for payment of principal of $85,000 and interest at the rate of 6%, will the interest amount to $5,100? Explain.
> Select a business in your community and observe its internal controls over cash receipts and cash payments. The business could be a bank or a bookstore, a restaurant, a department store, or another retailer. In groups of three or four, identify and discu
> In teams, select a public company that interests you and is a business that requires inventory. Obtain the company’s most recent annual report on Form 10-K. The Form 10-K is a company’s annually required filing with the Securities and Exchange Commission
> Tehra Dactyl is an accountant for Skeds, Inc., a footwear and apparel company. The company’s revenue and net income have increased by more than 100% over the past three years. During the same period, Tehra and her colleagues in the Accounting Department
> TearLab Corp. is a health care company that specializes in developing diagnostic devices for eye disease. TearLab reported the following data (in thousands) for three recent years: 1. Determine the monthly cash expenses for Year 3, Year 2, and Year 1.
> The records of Parker Company indicate a July 31 cash balance of $10,400, which includes undeposited receipts for July 30 and 31. The cash balance on the bank statement as of July 31 is $10,575. This balance includes a note of $2,250 plus $150 interest c
> Quality Move Company made the following expenditures on one of its delivery trucks: Mar. 20. Replaced the transmission at a cost of $1,890. June 11. Paid $1,350 for installation of a hydraulic lift. Nov. 30. Paid $55 to change the oil and air filter. Pre
> The following is an excerpt from a conversation between the store manager of Wholesome Grocery Stores, Kara Dahl, and Lynn Shutes, president of Wholesome Grocery Stores: Lynn: Kara, I’m concerned about this new scanning system. Kara: What’s the problem?
> The following is an excerpt from a conversation between two salesclerks, Jean Moen and Sara Cheney. Jean and Sara are employed by Turpin Meadows Electronics, a locally owned and operated electronics retail store. Jean: Did you hear the news? Sara: What n
> Wholesome and Happy Foods is a farm-to-family grocery store located in the Pacific Northwest. The company recently installed four self-checkout lanes that allow customers to scan their own groceries and pay for their purchases using an automated checkout
> Cedar Springs Company completed the following selected transactions during June: June 1. Established a petty cash fund of $1,000. 12. The cash sales for the day, according to the cash register records, totaled $9,440. The actual cash received from cash s
> The following procedures were recently installed by The China Shop: a. All sales are rung up on the cash register, and a receipt is given to the customer. All sales are recorded on a record locked inside the cash register. b. Each cashier is assigned a s
> Sunshine Interiors deposits all cash receipts each Wednesday and Friday in a night depository after banking hours. The data required to reconcile the bank statement as of July 31 have been taken from various documents and records and are reproduced as fo
> The cash account for Collegiate Sports Co. on November 1 indicated a balance of $81,145. During November, the total cash deposited was $293,150, and checks written totaled $307,360. The bank statement indicated a balance of $112,675 on November 30. Compa
> The cash account for Stone Systems at July 31 indicated a balance of $17,750. The bank statement indicated a balance of $33,650 on July 31. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following
> The following procedures were recently installed by Raspberry Creek Company: a. After necessary approvals have been obtained for the payment of a voucher, the treasurer signs and mails the check. The treasurer then stamps the voucher and supporting docum
> Beeler Furniture Company deposits all cash receipts each Wednesday and Friday in a night depository after banking hours. The data required to reconcile the bank statement as of June 30 have been taken from various documents and records and are reproduced
> Jackie Fox owns and operates Platinum Transport Co. During the past year, Jackie incurred the following costs related to an 18-wheel truck: 1. Changed engine oil. 2. Installed a television in the sleeping compartment of the truck. 3. Installed a wind def
> The cash account for Brentwood Bike Co. at May 1 indicated a balance of $34,250. During May, the total cash deposited was $140,300, and checks written totaled $138,880. The bank statement indicated a balance of $43,525 on May 31. Comparing the bank state
> The cash account for American Medical Co. at April 30 indicated a balance of $334,985. The bank statement indicated a balance of $388,600 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed t
> Jeremiah Restoration Company completed the following selected transactions during January: Jan. 1. Established a petty cash fund of $900. 12. The cash sales for the day, according to the cash register records, totaled $6,148. The actual cash received fro
> A former chairman, CFO, and controller of Donnkenny, Inc., an apparel company that makes sportswear for Pierre Cardin and Victoria Jones, pleaded guilty to financial statement fraud. These managers used false journal entries to record fictitious sales, h
> All-Around Sound Co. discovered a fraud whereby one of its front office administrative employees used company funds to purchase goods such as computers, digital cameras, and other electronic items for her own use. The fraud was discovered when employees
> FedEx Corporation and United Parcel Service, Inc. compete in the package delivery business. The major fixed assets for each business include aircraft, sorting and handling facilities, delivery vehicles, and information technology. The sales and average b
> Verizon Communications Inc. is a major telecommunications company in the United States. Two recent balance sheets for Verizon disclosed the following information regarding fixed assets: Verizon’s revenue for the year was $131,620 mill
> Amazon.com, Inc. is the world’s leading Internet retailer of merchandise and media. Amazon also designs and sells electronic products, such as e-readers. Netflix, Inc. is the world’s leading Internet television network
> List the errors you find in the following partial balance sheet: Burnt Red Company Balance Sheet December 31, 20Y2 Assets Total current assets. $350,000 Replacement Accumulated Cost Book Value Depredation Property, plant, and equipment: $ 250,000 $
> US Freight Lines Co. incurred the following costs related to trucks and vans used in operating its delivery service: 1. Installed GPS systems on the trucks. 2. Replaced the transmission fluid on a truck that had been in service for the past four years. 3
> The following units of a particular item were available for sale during the calendar year: The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance
> One of the largest losses in history from unauthorized securities trading involved a securities trader for the French bank Societe Generale. The trader was able to circumvent internal controls and create more than $7 billion in trading losses in six mont
> Selected accounts and related amounts for Kanpur Co. for the fiscal year ended June 30, 2019, are presented in Problem 6-5B. In Problem 6-5B The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal yea
> The following units of a particular item were available for sale during the calendar year: The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance
> Pacific Bank provides loans to businesses in the community through its Commercial Lending Department. Small loans (less than $100,000) may be approved by an individual loan officer, while larger loans (greater than $100,000) must be approved by a board o
> Ramona’s Clothing is a retail store specializing in women’s clothing. The store has established a liberal return policy for the holiday season in order to encourage gift purchases. Any item purchased during November and December may be returned through J
> Jimmy Pace has recently been hired as the manager of Jittery Jon’s Coffee Shop. Jittery Jon’s Coffee Shop is a national chain of franchised coffee shops. During his first month as store manager, Jimmy encountered the following internal control situations
> Using Wikipedia (www.wikipedia.com), look up the entry for Sarbanes-Oxley Act. Look over the table of contents and find the section that describes Section 404. What does Section 404 require of management’s internal control report?
> Amicus Therapeutics, Inc., is a biopharmaceutical company that develops drugs for the treatment of various diseases, including Parkinson’s disease. Amicus Therapeutics reported the following financial data (in thousands) for three recen
> Capstone Turbine Corporation produces and sells turbine generators for such applications as charging electric, hybrid vehicles. Capstone Turbine reported the following financial data for a recent year (in thousands): Net cash flows from operating activit
> Mattel, Inc., designs, manufactures, and markets toy products worldwide. Mattel’s toys include Barbie® fashion dolls and accessories, Hot Wheels®, and Fisher-Price brands. For a recent year, Mattel reported the following net cash flows from operating act
> Journalize the entries to record the following: a. Check is issued to establish a petty cash fund of $750. b. The amount of cash in the petty cash fund is now $176. Check is issued to replenish the fund, based on the following summary of petty cash recei
> Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions Co. discovered during October that one of its salesclerks had stolen an undetermined amount of cash receipts while taking the daily deposits to t
> The following June 30 bank reconciliation was prepared for Poway Co. a. Identify the errors in the following bank reconciliation: b. Prepare a new bank reconciliation for Poway Co., using the format shown in the illustrative problem. Poway Co. Bank
> Assume that the business in Exercise 7-5 maintains a perpetual inventory system, costing by the first-in, first-out method. Determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form il
> The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 2019: Instructions 1. Prepare a multiple-step income statement. 2. Prepare a statement of owner’s equity.
> An accounting clerk for Chesner Co. prepared the following bank reconciliation: a. From the data in this bank reconciliation, prepare a new bank reconciliation for Chesner Co., using the format shown in the illustrative problem. b. If a balance sheet i
> Using the data presented in Exercise 8-18, journalize the entry or entries that should be made by the company. In Exercise 8-18 The following data were accumulated for use in reconciling the bank account of Mathers Co. for July: 1. Cash balance accordin
> The following data were accumulated for use in reconciling the bank account of Mathers Co. for July: 1. Cash balance according to the company’s records at July 31, $32,110. 2. Cash balance according to the bank statement at July 31, $31,350. 3. Checks ou
> Which of the reconciling items listed in Exercise 8-16 require an entry in the company’s accounts? In Exercise 8-16 1. Bank service charges, $30. 2. Check of a customer returned by bank to company because of insufficient funds, $400. 3. Check for $320 i
> Identify each of the following reconciling items as: (a) An addition to the cash balance according to the bank statement, (b) A deduction from the cash balance according to the bank statement, (c) An addition to the cash balance according to the company’
> Paragon Tech Company, a communications equipment manufacturer, recently fell victim to a fraud scheme developed by one of its employees. To understand the scheme, it is necessary to review Paragon Tech’s procedures for the purchase of services. The purch
> Abbe Co. is a small merchandising company with a manual accounting system. An investigation revealed that in spite of a sufficient bank balance, a significant amount of available cash discounts had been lost because of failure to make timely payments. In
> Sergio Flores works at the drive-through window of Big & Bad Burgers. Occasionally, when a drive-through customer orders, Sergio fills the order and pockets the customer’s money. He does not ring up the order on the cash register. Identify the internal c
> The ticket seller at a movie theater doubles as a ticket taker for a few minutes each day while the ticket taker is on a break. Which control procedure of a business’s system of internal control is violated in this situation?
> Before inventory purchases are recorded, the receiving report should be reconciled to what documents?
> (a) Name and describe the five elements of internal control. (b) Is any one element of internal control more important than another?
> The following selected transactions were completed during April between Swan Company and Bird Company: Apr. 2. Swan Company sold merchandise on account to Bird Company, $32,000, terms FOB shipping point, 2/10, n/30. Swan Company paid freight of $330, whi
> Knott Inc. has a petty cash fund of $750. (a) Since the petty cash fund is only $750, should Knott Inc. implement controls over petty cash? (b) What controls, if any, could be used for the petty cash fund?
> What is the purpose of preparing a bank reconciliation?
> Assume that Brooke Miles, accounts payable clerk for West Coast Design Inc., stole $48,350 by paying fictitious invoices for goods that were never received. The clerk set up accounts in the names of the fictitious companies and cashed the checks at a loc
> In teams, select a public company in the merchandising industry that interests you. Obtain the company’s most recent annual report on Form 10-K. The Form 10-K is a company’s annually required filing with the Securities and Exchange Commission (SEC). It i
> Anstead Co. is experiencing a decrease in sales and operating income for the fiscal year ending October 31. Ryan Frazier, controller of Anstead Co., has suggested that all orders received before the end of the fiscal year be shipped by midnight, October
> Sizemo Elektroniks sells semiconductors that are used in games and small toys. The company has been extremely successful in recent years, recording an increase in earnings each of the past six quarters. At the end of the current quarter, Jay Shulz, the c
> The general merchandise retail industry has a number of segments represented by the following companies: Company Name ______________Merchandise Concept Costco Wholesale Corporation ………â
> Target Corp. sells merchandise primarily through its retail stores. On the other hand, Amazon.com uses its e-commerce services, features, and technologies to sell its products through the Internet. Recent balance sheet inventory disclosures for Target an
> Margie Johnson is a staff accountant at ToolEx Company, a manufacturer of tools and equipment. The company is under pressure from investors to increase earnings, and the president of the company expects the accounting department to “make this happen.” Ma
> The following is an excerpt from a conversation between Paula Marlo, the warehouse manager for Musick Foods Wholesale Co., and its accountant, Mike Hayes. Musick Foods operates a large regional warehouse that supplies produce and other grocery products t
> Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Sales: April …………â&#
> The following were selected from among the transactions completed by Essex Company during July of the current year: July 3. Purchased merchandise on account from Hamling Co., list price $72,000, trade discount 15%, terms FOB shipping point, 2/10, n/30, w
> The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown in Problem 7-1B. In Problem 7-1B The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending
> The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown in Problem 7-1B. In Problem 7-1B The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending
> The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows: Instructions 1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory reco
> Selected data on merchandise inventory, purchases, and sales for Jaffe Co. and Coronado Co. are as follows: Instructions 1. Determine the estimated cost of the merchandise inventory of Jaffe Co. on February 28 by the retail method, presenting details o
