Patron_Week4_Lab1 - Problems Group B (10-15 min.) P 9-1B...

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Unformatted text preview: Problems Group B (10-15 min.) P 9-1B MEMORANDUM DATE: ____________________ TO: Company Employees FROM: William Yang, President RE: Procedures to assure that all cash receipts are deposited in the bank and that each days total cash receipts are posted to accounts receivable. 1. Someone other than the accountant opens the mail. This person separates customer checks from the accompanying remittance slips. 2. An employee with no access to the accounting records deposits the cash in the bank immediately. 3. The remittance slips go to the accountant, who uses them for posting credits to the customer accounts. (continued) P 9-1B 4. A third person, such as the manager or the owner, compares the amount of the bank deposit to the total of the customer credits posted by the accountant. This gives some assurance that the days cash receipts went into the bank and that the same amount was posted to customer accounts. 5. The person who handles cash should not prepare the bank reconciliation. Student responses may vary. (20-30 min.) P 9-2B Req. 1 (Allowance Method) Journal DATE ACCOUNTS AND EXPLANATIONS POST. REF. DEBIT CREDIT Mar. 31 Accounts Receivable 445,000 Sales Revenue 445,000 31 Cash 422,600 Accounts Receivable 422,600 31 Uncollectible-Account Expense ($445,000 .02) 8,900 Allowance for Uncollectible Accounts 8,900 31 Allowance for Uncollectible Accounts 3,500 Accounts Receivable 3,500 Accounts Receivable Allowance for Uncollectible Accounts 75,000 422,600 800 445,000 3,500 3,500 8,900 Bal. 93,900 Bal. 6,200 Uncollectible-Account Expense 8,900 Bal. 8,900 (continued) P 9-2B Req. 2 (Direct Write-Off Method) Journal DATE ACCOUNTS AND EXPLANATIONS POST. REF. DEBIT CREDIT Mar. 31 Accounts Receivable 445,000 Sales Revenue 445,000 31 Cash 422,600 Accounts Receivable 422,600 31 Uncollectible-Account Expense 3,500 Accounts Receivable 3,500 Accounts Receivable Uncollectible-Account Expense 75,000 422,600 3,500 445,000 3,500 Bal. 3,500 Bal. 93,900 (continued) P 9-2B Req. 3 INCOME STATEMENT: Allowance Method Direct Write- Off Method Uncollectible-account expense........ $8,900 $3,500 Uncollectible-account expense under the allowance method better matches expense with revenue because it is recorded in the same period the sales are made. The expense measured by the direct write-off method is not related to revenue in any systematic way....
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Patron_Week4_Lab1 - Problems Group B (10-15 min.) P 9-1B...

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