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Chapter5 - (5-10 min S 5-5 MEMORANDUM DATE TO Zach Peters...

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(5-10 min.) S 5-5 MEMORANDUM DATE: TO: Zach Peters FROM: Student Name RE:Essential element of internal control over collection from customers Separation of duties is the essential element in a system to ensure that cash received by mail from customers is properly handled and accounted for. It is very important to separate cash-handling duties from accounting duties. Otherwise, an employee can steal a cash receipt from a customer and cover the theft by writing off the customer account as uncollectible. Student responses may vary.
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(10-15 min.) E 5-18A 1. This is a trading investment because Northern Corporation intends to sell the stock within a short time. 2. Dec. 15 Short-Term Investment (800 × $54)….. 43,200 Cash………………………………………. 43,200 Purchased investment. Dec. 31 Short-Term Investment [(800 × $66) $43,200]………………….. 9,600 Unrealized Gain on Investment……… 9,600 Adjusted investment to market value. 3. BALANCE SHEET Current assets: Short-term investment, at market value………… $52,800 INCOME STATEMENT Other revenue and gains: Unrealized gain on investment……………………… $ 9,600
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(15 min.) E 5-22A Req. 1 Journal DATE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT Oct. Accounts Receivable……………………... 161,000 Sales Revenue…………………… 161,000 Oct. Cash………………………………………….. 137,000 Accounts Receivable……………… 137,000 Oct. Allowance for Uncollectible Accounts… 2,300 Accounts Receivable……………… 2,300 Oct. Uncollectible-Account Expense ($161,000 × .04)……………………………..
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