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Chap008 Solution Manual

Exercise 8 9 25 minutes frederick clinic bank

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Exercise 8-9 (25 minutes) FREDERICK CLINIC Bank Reconciliation June 30, 2011 Bank statement balance ..... $14,275 Book balance ................... ....................................... $15,141 Add Add Deposit of June 30 .......... 3,250 Error on Ck. No. 919 ........ 9 17,525 15,150 Deduct Deduct Outstanding checks ........ 2,500 Bank service charge ........ 125 Adjusted bank balance ...... $15,025 Adjusted book balance ...... $15,025 Exercise 8-10 (10 minutes) June 30 Cash 9 Utilities Expense ..................................... 9 To correct a journal entry error. 30 Miscellaneous Expenses ............................. 125 Cash ........................................................ 125 To record bank service charge. 8-12
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Chapter 08 - Cash and Internal Controls Exercise 8-11 (25 minutes) CHUNG COMPANY Bank Reconciliation May 31, 2011 Bank statement balance ..... $13,800 Book balance ................... ....................................... $15,500 Add Deposit of May 31 ........... 2,200 Bank error ...................... 400 16,400 Deduct Deduct Outstanding checks ........ 1,600 Bank service charge ........ 100 ______ NSF check ..................... 600 Adjusted bank balance ...... $14,800 Adjusted book balance ...... $14,800 Exercise 8-12 (15 minutes) (a) Days' sales uncollected on December 31, 2010: x 365 = 32.9 days Days' sales uncollected on December 31, 2011: x 365 = 46.8 days (b) Evaluation : The change from 32.9 to 46.8 days' sales uncollected indicates that the receivables have become less liquid. While the accounts receivable were, on average, collected in about one month at the end of 2010, this has increased by about 14 days in Year 2011. The company needs to follow up to identify the reasons for this change. 8-13 $51,000 $565,000 $83,000 $647,000
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Chapter 08 - Cash and Internal Controls Exercise 8-13 A (10 minutes) 1. B 3. A 5. C 2. D 4. F 6. E Exercise 8-14 B (25 minutes) a. Recording inventory at gross amounts Oct. 2 Merchandise Inventory ........................................ 4,000 Accounts Payable .......................................... 4,000 To record merchandise purchases. 10 Accounts Payable ................................................ 400 Merchandise Inventory ................................. 400 To record credit memo for returns. 17 Merchandise Inventory ........................................ 4,400 Accounts Payable .......................................... 4,400 To record merchandise purchases. 26 Accounts Payable ................................................ 4,400 Merchandise Inventory* ................................. 88 Cash ................................................................ 4,312 To record payment for merchandise less the discount. *($4,400 x .02) 31 Accounts Payable ................................................ 3,600 Cash ................................................................ 3,600 To record payment for merchandise less the returns ($4,000 - $400). 8-14
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Chapter 08 - Cash and Internal Controls Exercise 8-14 B (Concluded) b. Recording inventory at net amounts Oct. 2 Merchandise Inventory ........................................ 3,920 Accounts Payable .......................................... 3,920 To record merchandise purchases less discount [$4,000 - ($4,000 x .02) = $3,920]. 10 Accounts Payable ................................................ 392 Merchandise Inventory .................................. 392 To record credit memo for returns [$400 - ($400 x .02)]. *13 Discounts Lost ..................................................... 72 Accounts Payable .......................................... 72 To record the discount lost [($4,000 - $400) x.02]. 17 Merchandise Inventory ........................................ 4,312 Accounts Payable .......................................... 4,312 To record merchandise purchases less discount [$4,400 - ($4,400 x .02) = $4,312]. 26 Accounts Payable ................................................ 4,312 Cash ................................................................ 4,312 To record payment for merchandise. 31 Accounts Payable ................................................ 3,600 Cash ................................................................ 3,600 To record payment for merchandise less returns ($3,920 - $392 + $72). * This entry could alternatively be recorded on October 31 when the cash payment is made (this is likely since the invoice was filed incorrectly). 8-15
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Chapter 08 - Cash and Internal Controls PROBLEM SET A Problem 8-1A (20 minutes) 1. Violates separation of duties . The company should implement a policy whereby the person recording incoming cash receipts is not responsible for posting the payments to the customer accounts.
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