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Unformatted text preview: 5-52SOLUTION: Wayne Company (a)Debit entries in the Notes Payable account are definitely not conclusive evidence that the notes have been paid. The worth of this type of evidence would depend largely upon the quality of internal control.(b)Entries in the check register are not conclusive evidence that the notes were paid. If the entries in the check register correspond to the debits to the Notes Payable account (after taking interest payments into consideration), and the check register and general ledger are maintained by different employees, the value of this evidence is increased.(c)Paid checks constitute strong evidence, but the possibility remains that the checks may have been issued for some purpose other than the payment of the notes in question.(d)Notes bearing the bank perforation stamp "PAID" are the strongest kind of evidence that the notes have in fact been paid; none of the items previously listed is of equal importance to this type of evidence....
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This note was uploaded on 11/22/2011 for the course ACC 435 taught by Professor Hathcock during the Fall '11 term at National.
- Fall '11