2811422511

2811422511 - Chapter 4 Internal Control and Cash Check...

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Chapter 4 Internal Control and Cash Check Points (5-10 min.) CP 4-1 Separation of duties is essential for safeguarding assets. The person who has custody of an asset should not also account for the asset. A person who performs both duties can steal the asset and hide the theft by making a bogus entry in the accounting records. Student responses may vary. Chapter 4 Internal Control and Cash 255
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(10 min.) CP 4-2 1. Outstanding checks: Check No. Amount 337 $286.00 Subtracted on bank 338 319.47 side of reconciliation 339 83.00 340 203.14 341 458.53 2. Deposit in transit: Date Amount Added on bank Jan. 31 $1,591.63 side of reconciliation 3. Bank side of reconciliation Financial Accounting 6/e Solutions Manual 256
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(10 min.) CP 4-3 Bank Reconciliation May 31, 20XX BANK BOOKS Balance, May 31 $2,380 Balance, May 31 $1,475 Add: Add: Deposit in transit 500 Bank collection 550 2,880 Interest revenue 10 2,035 Less: Less: Service charge (20) Outstanding checks (900 ) NSF check (35 ) Adjusted bank balance $1,980 Adjusted book balance $1,980 (5 min.) CP 4-4 May 3 1 Cash………………………………………. . 550 Accounts Receivable………………. .. 550 Collection on account. 3 1 Cash………………………………………. . 10 Interest Revenue……………………. .. 10 Interest earned on bank balance. 3 1 Miscellaneous Expense………………. .. 20 Cash……………………………………. 20 Bank service charge. 3 Accounts Receivable…………………… 35 Chapter 4 Internal Control and Cash 257
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1 Cash……………………………………. . 35 NSF check. (5 min.) CP 4-5 It appears that the employee has stolen $400 (adjusted book balance, $3,000 – adjusted bank balance, $2,600). The adjusted bank balance is the company’s true cash balance, and the company books show more cash on hand. Therefore, the books must be incorrect. (5 min.) CP 4-6 Someone with only accounting duties should prepare the bank reconciliation. The preparer should not have cash-handling duties because that person could steal cash and cover the theft by manipulating the bank reconciliation. (5 min.) CP 4-7 Stinnett will notice a gap in the sequence of sales receipts for the receipt that Herzog destroyed. This knowledge will lead Stinnett to investigate what happened to the missing receipt and what happened to the related cash. Also, Stinnett will have to answer the questions of the customer who paid for a membership and who is denied the Financial Accounting 6/e Solutions Manual 258
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right to use the YMCA, yet can show his receipt. This knowledge will point to Herzog, who sold the membership. Chapter 4 Internal Control and Cash 259
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(10 min.) CP 4-8 1. A dishonest purchasing agent could: Purchase goods and have them delivered to his home or other location that he controls, or otherwise take the goods for personal use. Approve payment by the company for goods that he used
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This homework help was uploaded on 04/07/2008 for the course ACCT 203 taught by Professor Fewox during the Spring '08 term at CofC.

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2811422511 - Chapter 4 Internal Control and Cash Check...

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