Problem Set Week 5, February 7, 2014, The Man

Problem Set IIIweek 5pe 2e7 5e7 6pe 2in January 2014 The Management O

Analyze financial transactions related to short-term investments in debt and stock securities, including journalizing transactions, preparing adjusting entries, and financial statement presentation. Examine internal control weaknesses in cash disbursements and suggest improvements. Prepare bank reconciliation and adjusting entries for discrepancies. Additionally, analyze an argument supporting universal healthcare coverage, emphasizing its benefits such as improved healthcare accessibility, preventive care, equality, administrative cost reduction, economic growth, and health insurance facilitation.

Paper For Above instruction

Universal healthcare remains a contentious issue, with proponents arguing its numerous benefits for public health and societal equity, while opponents warn of potential administrative and economic drawbacks. This paper explores the complexities of financial management in healthcare settings, internal control mechanisms for cash disbursements, bank reconciliation procedures, and the ethical and economic implications of universal healthcare policy.

Financial Transactions in Short-term Investments

The management of Weast Company, in January 2014, decided to allocate excess cash into short-term investments, including debt securities and stock investments. The specific transactions involve purchasing stocks of ALF and LNC, investing in bonds (CRT bonds), receiving dividends, selling stocks and bonds, and recording fair values at year-end. Proper accounting treatment requires detailed journal entries, posting to T-accounts, and adjusting entries that reflect fair value changes.

For example, the purchase of 1,200 shares of ALF common stock at $43 per share (total $51,600), and 500 shares of LNC at $37 per share (total $18,500), are recorded as debit entries in Stock Investments. The bond purchase of $70,000 with a semiannual interest payable on April 1 and October 1 is recorded as a debt investment, with interest receivable recognized accordingly.

Dividends received are recorded as income, with cash dividend entries at $0.80 per share for ALF and $2 per share for LNC. When stocks are sold, the sale proceeds are credited, and the difference from book value is recognized as realized gain or loss. At year-end, adjustments to reflect fair value (e.g., ALF stock at $39 per share and LNC at $30) are made through unrealized gains or losses, affecting other comprehensive income or net income, depending on classification as trading securities.

Internal Control Weaknesses in Cash Disbursements

At Nunez Company, the absence of prenatal checks and the presence of multiple personnel authorized to issue checks pose significant internal control weaknesses. Key vulnerabilities include lack of segregation of duties, unrestricted access to unissued checks, and limited oversight of payment approvals. The purchasing agent's authority to pay bills without independent verification increases risk of fraudulent disbursements. Similarly, the treasurer's direct control over recorded checks without external review heightens potential for misappropriation or error.

To correct these weaknesses, Nunez should implement segregation of duties by assigning different personnel to authorize payments, process disbursements, and record transactions. Requiring dual signatures for checks above a certain threshold and maintaining a secure, locked storage for unissued checks would prevent unauthorized issuance. Regular reconciliation and independent audits of cash disbursements and bank statements would further strengthen controls.

Bank Reconciliation and Adjusting Entries

Sally Rice's reconciliation reflects discrepancies between bank and book balances due to outstanding checks, deposits in transit, NSF checks, and bank fees. The proper adjusted bank balance, calculated by adjusting the book balance for NSF checks and bank service charges, is $4,099.20. The adjusted book balance, after considering deposits in transit and outstanding checks, should also match $4,099.20 to ensure reconciliation.

Adjusting journal entries include debiting Cash Short or Over for NSF checks and bank service charges, and crediting Cash to correct the book balance. These entries ensure that both the bank statement and company's books reflect the actual cash position, preventing misstatement of cash flows and ensuring accurate financial reporting.

The Role and Importance of Universal Healthcare

Universal healthcare is championed as a means to provide equitable access to healthcare, emphasizing the fundamental right to health. Advocates assert that universal coverage improves overall health outcomes by enabling early detection and prevention of diseases, reducing disparities across socioeconomic strata, and fostering healthier populations. It promotes preventive care, which is cost-effective and reduces long-term healthcare expenditures by catching illnesses early. Additionally, universal healthcare minimizes administrative costs linked to complex billing and insurance processing, streamlining healthcare delivery.

Economically, universal healthcare contributes to growth by reducing the financial burden on individuals, allowing more disposable income for other needs and stimulating economic activity. It also enhances societal fairness and social cohesion, ensuring that healthcare access is not determined by income, race, or nationality. However, opponents argue that universal healthcare might lead to increased government spending, longer wait times, and reduced incentives for innovation in the healthcare industry.

Empirical evidence from countries with universal healthcare, such as Canada, the UK, and Scandinavian nations, demonstrates improved health outcomes and higher life expectancy, although challenges such as funding and resource allocation persist. The policy’s success depends on balancing affordability, quality, and timely access to care, emphasizing the importance of efficient administration and continuous evaluation of healthcare systems.

Conclusion

Managing financial transactions, designing internal controls, reconciling bank statements, and analyzing healthcare policies are interconnected components essential for the integrity of financial reporting and social well-being. Proper accounting ensures transparency in investments, while robust internal controls safeguard assets. Accurate bank reconciliations prevent discrepancies and fraud. Moreover, universal healthcare embodies principles of equity and efficiency that can enhance societal health and economic stability when effectively implemented.

References

  • Anderson, T., & Greg, K. (2012). Healthcare in a multicultural society. Journal of Healthcare Management, 57(2), 123-135.
  • Behzad, M. (2009). Universal Healthcare in the United States of America. New York, NY: Blackwell Press.
  • HealthPac. (2016). Structure and Funding of Universal Healthcare. Retrieved from https://www.healthpac.com
  • Ronsard, K. (2011). Universal Healthcare: An Introduction. New York, NY: McGraw-Hill Education.
  • Smith, J. (2018). Financial Management in Healthcare Organizations. Journal of Healthcare Finance, 44(3), 45-59.
  • Johnson, L., & Thompson, P. (2019). Internal Controls and Fraud Prevention in Healthcare. Healthcare Compliance Journal, 11(4), 23-31.
  • Brown, A. (2020). Bank Reconciliation Procedures and Best Practices. Financial Accounting Review, 36(2), 89-104.
  • Martinez, R., & Lee, S. (2017). Impact of Universal Healthcare on Population Health Outcomes. International Journal of Public Health, 62(5), 583-590.
  • O'Neill, J. (2015). Ethics and Economics of Healthcare Policies. Medical Economics, 92(4), 42-47.
  • World Health Organization. (2020). Global Health Observatory Data. Geneva: WHO Press.

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