hmwk_ch7 - PE 71B 1. 2. 3. (a) the control environment (b)...

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PE 7–1B 1. (a) the control environment 2. (b) control procedures 3. (c) monitoring PE 7–2A Appears on the Bank Increases or Decreases Statement as a Debit the Balance of the Item No. or Credit Memorandum Depositor’s Bank Account 1 debit memorandum decreases 2 credit memorandum increases 3 credit memorandum increases 4 debit memorandum decreases PE 7–2B Appears on the Bank Increases or Decreases Statement as a Debit the Balance of the Item No. or Credit Memorandum Depositor’s Bank Account 1 credit memorandum increases 2 credit memorandum increases 3 debit memorandum decreases 4 credit memorandum increases
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PE 7–3A a. $8,820 as shown below. Bank section of reconciliation: $9,200 + $2,800 – $3,180 = $8,820 Company section of reconciliation: $9,335 – $40 – $475 = $8,820 b. Accounts Receivable. .......................................... 475 Miscellaneous Expense. ...................................... 40 Cash. ................................................................. 515 PE 7–3B a. $24,300 as shown below. Bank section of reconciliation: $28,100 + $3,100 – $6,900 = $24,300 Company section of reconciliation: $9,155 + $15,225 – $80 = $24,300 b. Miscellaneous Expense. ...................................... 80 Cash. ................................................................. 80 Cash. ...................................................................... 15,225 Notes Receivable. ........................................... 15,000 Interest Revenue. ............................................ 225 PE 7–4A a. Petty Cash. ............................................................ 600 Cash. ................................................................. 600 b. Repair Expense. .................................................... 350 Miscellaneous Selling Expense. ......................... 55 Cash Short and Over. ........................................... 20 Cash. ................................................................. 425 PE 7–4B a. Petty Cash. ............................................................ 400 Cash. ................................................................. 400 b. Store Supplies. ..................................................... 180 Miscellaneous Selling Expense. ......................... 110 Cash Short and Over. ........................................... 25 Cash. ................................................................. 315
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Ex. 7–3 a. The sales clerks could steal money by writing phony refunds and pocketing the cash supposedly refunded to these fictitious customers. b. Rare Earth Clothing suffers from inadequate separation of responsibilities for related operations since the clerks issue refunds and restock all merchandise. In addition, there is a lack of proofs and security measures since the supervisors authorize returns two hours after they are issued. c.
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This note was uploaded on 04/27/2008 for the course ACG 2021 taught by Professor Cobb during the Spring '08 term at Saint Petersburg.

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hmwk_ch7 - PE 71B 1. 2. 3. (a) the control environment (b)...

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