Accounting Handout 7.1 Essay Example

results from preparing Safe and Secure Security Systems’ bank reconciliation in problem #6. Journalize the company’s transactions that arise from the bank reconciliation, including an explanation with each entry.

1: Diedre Chevis sells furniture for DuBois Furniture Company. Chevis is facing financial problems and takes $500 that she received from a customer, ringing up the sale through the cash register. What will alert Betsy DuBois, the controller, that something is wrong? Review the internal controls over cash receipts by mail presented in the chapter. Exactly what is accomplished by the final step in the process, performed by the controller?

10: A purchasing agent for Westgate Wireless receives and approves payment for the goods he purchases. How could this purchasing agent cheat his company? How could Westgate avoid this internal control weakness?

The following petty cash transactions of Lexite Laminated Surfaces occurred in August: Prepare journal entries without explanations.

Gwen O’Malley, an accountant for Ireland Limited, has discovered that her supervisor, Blarney Stone, made numerous mistakes in the previous year which caused the company's net income to be overstated by 20%. It is unclear whether these errors were intentional or accidental. O'Malley needs to determine the appropriate course of action.
Requirement R1: What should O'Malley do?
13. The bank reconciliation may include the following items:
Requirement R1: Classify each item as an addition to the book balance, a subtraction from the book balance, an addition to the bank balance, or a subtraction from the bank balance.
2. Louise’s Dance Studio established a $200 imprest petty cash fund.

During the month, the fund custodian authorized and signed petty cash tickets which are outlined in Requirement R1. The tickets were used to

a) create the petty cash fund and b) record its replenishment. The total cash in the fund is $15, but $10 is missing. Explanations for these transactions should be included.

Furthermore, a series of situations have been identified which each exhibit a weakness in internal control. In Requirement R1, the missing internal control characteristics need to be identified for each situation. Additionally, Requirement R2 specifies that the possible problems caused by each control weakness must be identified. Finally, Requirement R3 calls for proposing a solution to rectify each internal control problem.

The April cash records of Donald Insurance are provided for reference.

Donald Insurance has a Cash account balance of $17,040 as of April 30. On the same day, they received a bank statement with additional data for the bank reconciliation. The requirements for this reconciliation are as follows: R1 - Prepare the bank reconciliation for Donald Insurance at April 30, 2011. R2 - Journalize any necessary entries from the bank reconciliation. On November 1, Fab Salad Dressings establishes a petty cash fund with an imprest balance of $400. Throughout November, Sunny Lewis, the fund custodian, signs various petty cash tickets. As of November 30, before replenishment, the fund contains these tickets and $245 in cash.

The following accounts are affected by petty cash payments: Office supplies expense, Travel expense, Delivery expense, Entertainment expense, and Inventory. There are four requirements to address. First, explain the characteristics and internal control features of an imprest fund. Second, determine the amount of cash the petty cash fund should hold before being replenished on November 30. Third, journalize all necessary entries to establish and replenish the fund, providing explanations for each entry.

Lastly, make an entry on December 1 to increase the fund balance to $450 and provide a brief description of the custodian's responsibilities.