Identify The Principles Of Internal Control Inherent In The

Identify the principles of internal control inherent in the “maker-checkerâ€

Acc 556 Financial Accounting For Managerschapter 7 Homeworkdue Week

Acc 556 Financial Accounting For Managerschapter 7 Homeworkdue Week

ACC 556 – Financial Accounting for Managers Chapter 7 Homework Due Week 4 and worth 10 points Directions: Answer the following four questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your homework assignment using the homework assignment link in the course shell. E7-1 Bank employees use a system known as the “maker-checker†system. An employee will record an entry in the appropriate journal, and then a supervisor will verify and approve the entry.

These days, as all of a bank’s accounts are computerized, the employee first enters a batch of entries into the computer, and then the entries are posted automatically to the general ledger account after the supervisor approves them on the system. Access to the computer system is password-protected and task-specific, which means that the computer system will not allow the employee to approve a transaction or the supervisor to record a transaction. Instructions: Identify the principles of internal control inherent in the “maker-checker†procedure used by banks. E7-3 The following control procedures are used in Kelton Company for over-the-counter cash receipts. 1.

Each store manager is responsible for interviewing applicants for cashier jobs. They are hired if they seem honest and trustworthy. 2. All over-the-counter receipts are registered by three clerks who share a cash register with a single cash drawer. 3.

To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attaché case in the stock room until it is deposited in the bank. 4. At the end of each day the total receipts are counted by the cashier on duty and reconciled to the cash register total. 5. The company accountant makes the bank deposit and then records the day’s receipts.

Instructions: (a) For each procedure, explain the weakness in internal control and identify the control principle that is violated. (b) For each weakness, suggest a change in the procedure that will result in good internal control. E7-5 At Nunez Company, checks are not prenumbered because both the purchasing agent and the treasurer are authorized to issue checks. Each signer has access to unissued checks kept in an unlocked file cabinet. The purchasing agent pays all bills pertaining to goods purchased for resale. Prior to payment, the purchasing agent determines that the goods have been received and verifies the mathematical accuracy of the vendor’s invoice.

After payment, the invoice is filed by vendor name and the purchasing agent records the payment in the cash disbursements journal. The treasurer pays all other bills following approval by authorized employees. After payment, the treasurer stamps all bills “paid,†files them by payment date, and records the checks in the cash disbursements journal. Nunez Company maintains one checking account that is reconciled by the treasurer. Instructions: (a) List the weaknesses in internal control over cash disbursements. (b) Identify improvements for correcting these weaknesses.

E7-10 The cash records of Downs Company show the following. For July: 1. The June 30 bank reconciliation indicated that deposits in transit total $580. During July, the general ledger account Cash shows deposits of $16,900, but the bank statement indicates that only $15,600 in deposits were received during the month. 2.

The June 30 bank reconciliation also reported outstanding checks of $940. During the month of July, Downs Company books show that $17,500 of checks were issued, yet the bank statement showed that $16,400 of checks cleared the bank in July. For September: 3. In September, deposits per bank statement totaled $25,900, deposits per books were $26,400, and deposits in transit at September 30 were $2,200. 4.

In September, cash disbursements per books were $23,500, checks clearing the bank were $24,000, and outstanding checks at September 30 were $2,100.There were no bank debit or credit memoranda, and no errors were made by either the bank or Downs Company. Instructions: Answer the following questions. (a) In situation 1, what were the deposits in transit at July 31? (b) In situation 2, what were the outstanding checks at July 31? (c) In situation 3, what were the deposits in transit at August 31? (d) In situation 4, what were the outstanding checks at August 31? ACC 556 Chapter 7 Homework ) ACC 556 – Financial Accounting for Managers Chapter 6 Homework Due Week 3 and worth 10 points Directions: Answer the following four questions on a separate document.

Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your homework assignment using the homework assignment link in the course shell. E6-1 Columbia Bank and Trust is considering giving Gallup Company a loan. Before doing so, it decides that further discussions with Gallup’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $275,000.

Discussions with the accountant reveal the following. 1. Gallup sold goods costing $55,000 to Bazil Company FOB shipping point on December 28. The goods are not expected to reach Bazil until January 12. The goods were not included in the physical inventory because they were not in the warehouse.

2. The physical count of the inventory did not include goods costing $95,000 that were shipped to Gallup FOB destination on December 27 and were still in transit at year-end. 3. Gallup received goods costing $25,000 on January 2. The goods were shipped FOB shipping point on December 26 by Lynch Co.

The goods were not included in the physical count. 4. Gallup sold goods costing $51,000 to Lamey of Canada FOB destination on December 30. The goods were received in Canada on January 8. They were not included in Gallup’s physical inventory.

5. Gallup received goods costing $42,000 on January 2 that were shipped FOB destination on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $275,000. Instructions: Determine the correct inventory amount on December 31.

E6-3 Mateo Inc. had the following inventory situations to consider at January 31, its year-end. (a) Goods held on consignment for Schrader Corp. since December 12. (b) Goods shipped on consignment to Lyman Holdings Inc. on January 5. (c) Goods shipped to a customer, FOB destination, on January 29 that are still in transit. (d) Goods shipped to a customer, FOB shipping point, on January 29 that are still in transit. (e) Goods purchased FOB destination from a supplier on January 25, that are still in transit. (f) Goods purchased FOB shipping point from a supplier on January 25, that are still in transit. (g) Office supplies on hand at January 31. Instructions: Identify which of the preceding items should be included in inventory.

If the item should not be included in inventory, state in what account, if any, it should have been recorded. E6-7 Eggers Company reports the following for the month of June. Date Explanation Units Unit Cost Total Cost June 1 Inventory 120 $5 $ Purchase , Purchase , Inventory 230 Instructions: (a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average-cost. (Round average unit cost to three decimal places). (b) Which costing method gives the highest ending inventory? The highest cost of goods sold? Why? (c) How do the average-cost values for ending inventory and cost of goods sold relate to ending inventory and cost of goods sold for FIFO and LIFO? (d) Explain why the average cost is not $6.

ACC 556 Chapter 6 Homework ) ACC 556 – Financial Accounting for Managers Chapter 5 Homework Due Week 3 and worth 10 points Directions: Answer the following four questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your homework assignment using the homework assignment link in the course shell. E5-1 This information relates to Crisp Co. 1.

On April 5, purchased merchandise from Frost Company for $28,000, terms 2/10, n/30. 2. On April 6, paid freight costs of $700 on merchandise purchased from Frost. 3. On April 7, purchased equipment on account for $30,000.

4. On April 8, returned $3,600 of April 5 merchandise to Frost Company. 5. On April 15, paid the amount due to Frost Company in full. Instructions: (a) Prepare the journal entries to record the transactions listed above on Crisp Co.’s books.

Crisp Co. uses a perpetual inventory system. (b) Assume that Crisp Co. paid the balance due to Frost Company on May 4 instead of April 15. Prepare the journal entry to record this payment. E5-7 Financial information is presented here for two companies. Yanik Company Nunez Company Sales revenue $90,000 ? Sales returns and allowances ? $ 5,000 Net sales 84,,000 Cost of goods sold 58,000 ?

Gross profit ? 40,000 Operating expenses 14,380 ? Net income ? 17,000 Instructions: (a) Fill in the missing amounts. Show all computations. (b) Calculate the profit margin and the gross profit rate for each company. (c) Discuss your findings in part b.

E5-9 Suppose in its income statement for the year ended June 30, 2014, The Clorox Company reported the following condensed data (dollars in millions). Salaries and wages expense $ 460 Research and development expense $ 114 Depreciation expense 90 Income tax expense 276 Sales revenue 5,730 Loss on disposal of plant assets 46 Interest expense 161 Cost of goods sold 3,104 Advertising expense 499 Rent expense 105 Sales returns and allowances 280 Utilities expense 60 Instructions: (a) Prepare a multiple-step income statement. (b) Calculate the gross profit rate and the profit margin and explain what each means. (c) Assume the marketing department has presented a plan to increase advertising expenses by $340 million. It expects this plan to result in an increase in both net sales and cost of goods sold of 25%. (Hint: Increase both sales revenue and sales returns and allowances by 25%.) Redo parts (a) and (b) and discuss whether this plan has merit. (Assume a tax rate of 34%, and round all amounts to whole dollars.) ACC 556 Chapter 5 Homework)