31 accounts receivables bax 43180 cash 43180 to

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31 Accounts Receivable—S. Bax ...................... 431.80 Cash ......................................................... 431.80 To charge account for NSF check plus fee. 31 Miscellaneous Expenses .............................. 12.00 Cash ......................................................... 12.00 To record bank service fee. 31 Utilities Expense ........................................... 10.00 Cash ......................................................... 10.00 To correct an entry error. 8-29
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Chapter 08 - Cash and Internal Controls Problem 8-5B ( Concluded) Part 3 There are several possible reasons why some prenumbered checks are missing from the sequence of canceled checks returned with a bank statement. Reasons include: (1) Some of the checks in the numbered sequence may have cleared the bank in a previous period and were returned with the bank statement in that previous period. (2) Some of the checks in the numbered sequence may remain outstanding. If so, they will be returned with the bank statement in a later period when they clear the bank. (3) The issuer of the checks may have voided one or more of the checks in the numbered sequence, perhaps because of making an error in writing the checks. (4) Occasionally, a check will reach the bank but the bank will incorrectly charge the check to the wrong account. When the bank detects the error, it will return the check separately with a note of explanation to the depositor. 8-30
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Chapter 08 - Cash and Internal Controls SERIAL PROBLEM — SP 8 Serial Problem — SP 8, Business Solutions (50 minutes) Part 1 BUSINESS SOLUTIONS Bank Reconciliation March 31, 2012 Bank statement balance ...... $67,566 Book balance ...................... .......................................... $68,057 Add Add Bank error ......................... Deposits in Transit .............. 500 0 Bank interest .................... 33 ______ 68,066 68,090 Deduct Deduct Outstanding Check .............. 128 Safety deposit rental...$ 50 ______ Charge for checks ...... 102 152 Adjusted bank balance ....... $67,938 Adjusted book balance ........ $67,938 Part 2 Mar. 25 Miscellaneous Expenses ................................ 677 50 Cash ........................................................... 101 50 To record safety deposit box rental. 26 Miscellaneous Expenses ................................ 677 102 Cash ........................................................... 101 102 To record charge for printing checks 31 Cash ................................................................. 101 33 Interest Revenue ...................................... 404 33 To record interest earned. 8-31
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Chapter 08 - Cash and Internal Controls Reporting in Action — BTN 8-1 1. ($ in thousands) Balance Feb. 27, 2010 Cash and equivalents as % of: Balance Feb. 28, 2009 Cash and equivalents as % of: Cash and cash equivalents ............. $ 1,550,861 $ 835,546 Current assets .......... 5,812,656 26.7% 4,841,586 17.3% Current liabilities ...... 2,431,777 63.8 2,115,351 39.5 Stockholders’ equity 7,602,663 20.4 5,874,128 14.2 Total assets .............. 10,204,409 15.2 8,101,372 10.3 Analysis comment: Cash and cash equivalents have increased as a percent of the various bases over this period. It is probably safe to say that Research In Motion’s liquidity position has improved. 2. Per the statement of cash flows for year ended February 27, 2010 ($ thousands): Cash and equivalents, beginning-year .......... $ 835,546 Cash and equivalents, year-end ..................... $1,550,861 Percent change * ....................................................... 85.6% increase *[($1,550,861 - $835,546) / $835,546] Per the statement of cash flows for year ended February 28, 2009 ($ thousands): Cash and equivalents, beginning-year ........... $1,184,398 Cash and equivalents, year-end ..................... $ 835,546 Percent change * ...................................................... 29.5% decrease *[($1,184,398 – $835,546) / $1,184,398] 8-32
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Chapter 08 - Cash and Internal Controls Reporting in Action ( Concluded) 3. Days' Sales Uncollected ($ millions) Days’ sales uncollected = x 365 Feb. 27, 2010: $2,593,742/ $14,953,224 x 365 = 63.31 days Feb. 28, 2009: $2,112,117/ $11,065,186 x 365 = 69.67 days The number of days of uncollected sales in accounts receivable has decreased from 69.67 days to 63.31 days. This decrease of 6.36 days indicates that the company’s assets are tied up in receivables for a shorter period of time; further, this difference is material.
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