INTERMEDIATE ACCOUNTING 1

COURSE PROJECT

I – Accounting for Cash

Listed below are five procedures followed by ABC Company.

1. Total cash receipts are compared to bank deposits daily by XYZ Enterprise, who receives cash
over the counter.
2. Employees write down hours worked and turn in the sheet to the cashier’s office.
3. As a cost-saving measure, employees do not take vacations.
4. Only the sales manager can approve credit sales.
5. Three different employees are assigned one task each related to inventory: ship goods to
customers, bill customers, and receive payment from customers.

Instructions:

Indicate whether each procedure is an example of good internal control or of weak internal control. If it
is an example of good internal control, indicate which internal control principle is being followed. If it is
an example of weak internal control, indicate which internal control principles is violated.

Internal Control Principle:

 Physical controls
 Independent internal verification
 Establishment of responsibility
 Segregation of duties
 Human resource controls

Use the table below for your answer.

Procedure Internal Control Good or Weak? Internal Control Principle

1 ? ?
2 ? ?
3 ? ?
4 ? ?
5 ? ?

Prepared by: Prof. Felanver M. Tonog, MBA, CLSSYB

II – Accounting for Cash
The information below relates to the Cash account in the ledger of BSA Company.

 Balance June 1—₱9,947; Cash deposited—₱37,120.

 Balance June 30—₱10,094; Checks written—₱36,973

The June bank statement shows a balance of ₱9,525 on June 30 and the following memoranda.

Credits Debits

Collection of ₱850 note plus interest ₱34 = ₱884 NSF check: R. Santos = ₱245

Interest earned on checking accounts = ₱26 Safety deposit box rent = ₱35

At June 30, deposits in transit were ₱2,581, and outstanding checks totalled ₱1,382.

Instructions:

(a) Prepare the bank reconciliation at June 30.

(b) Prepare the adjusting entries at June 30, assuming (1) the NFS check was from a customer on
account, and (2) no interest had been accrued on the note.

III- Accounting for Receivables

The ledger of FMT Company at the end of the current year shows Accounts Receivable ₱180,000, Sales
Revenue ₱1,800,000, and Sales Returns and Allowances ₱60,000.

Instructions:

Journalize entries to record allowance for doubtful accounts using different bases.

1. If FMT uses the direct write-off method to account for uncollectible accounts, journalize the
adjusting entry at December 31, assuming FMT determines that Rose’s ₱2,900 balance is
uncollectible.
2. If Allowance for Doubtful Accounts has a credit balance of ₱4,300 in the trial balance, journalize
the adjusting entry at December 31, assuming bad debts are expected to be (1) 1 % of net sales,
and (2) 10% of accounts receivable.
3. If Allowance for Doubtful Accounts has a debit balance of ₱410 in the trial balance, journalize
the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net
sales and (2) 6% of accounts receivable.

Prepared by: Prof. Felanver M. Tonog, MBA, CLSSYB