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Instant Download PDF Accounting Practices The New Zealand Context 3rd Edition McIntosh Solutions Manual Full Chapter
Instant Download PDF Accounting Practices The New Zealand Context 3rd Edition McIntosh Solutions Manual Full Chapter
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Answers to Chapter 7 Activities
7.1 The purpose of the petty cash fund is to facilitate the payment and recording of
those items that are individually too small to require the drawing of a cheque.
Postage Staff
& amenities
Date Details Receipts Expenditure GST Stationery couriers Cleaning General Drawings
Sept 1 Petty cash advance 50.00
7.5
Jack Moore
trading as Office Furniture Supplies
Petty Cash
for the month ended 30 April 2012
Staff Stationer
Date Details Receipts Expenditure GST amenities General Postage y Telephone Drawings
1 Opening balance 32.50
1 Coffee & biscuits 7.90 1.03 6.87
1 Extension cord 9.90 1.29 8.61
2 Drawings 10.00 10.00
2 Newspaper 1.00 0.13 0.87
3 Stationery 3.50 0.46 3.04
4 Reimbursement 180.00
7 Drawings 10.00
7 Cleaning supplies 17.50 2.28 15.22
8 Postage 11.40 1.49 9.91
8 Milk 1.50 0.20 1.30
9 Newspaper 1.00 0.13 0.87
10 Stationery 17.60 2.30 15.30
11 Cake 9.90 1.29 8.61
11 Taxi fare 19.50 2.54 16.96
14 Courier fee 11.50 1.50 10.00
16 Newspaper 1.00 0.13 0.87
17 Vodafone 20.00 2.61 17.39
19 Milk 1.50 0.20 1.30
23 Newspaper 1.00 0.13 0.87
24 Stationery 7.90 1.03 6.87
25 Milk & sugar 4.20 0.55 3.65
28 Biscuits 3.00 0.39 2.61
28 Postage 5.00 0.65 4.35
30 Newspaper 1.00 0.13 0.87
30 Cash short 11.60 11.60
222.50 178.40 20.46 24.34 56.74 24.26 25.21 17.39 10.00
Craig Waterhouse
trading as White Magic
Petty Cash
for the month ended 31 October 2012
Staff
Date Details Receipts Expenditure GST amenities Cleaning General Postage Stationery Telephone Drawings
1 Opening balance 58.90
1 Lightbulbs 6.40 0.83 5.57
1 Coffee 4.90 0.64 4.26
2 Postage stamps 6.00 0.78 5.22
3 Stationery 11.60 1.51 10.09
6 Drawings 7.00 7.00
7 Cleaning supplies 4.60 0.60 4.00
8 Postage stamps 9.00 1.17 7.83
8 Milk 1.80 0.23 1.57
9 Reimbursement 100.00
9 Biscuits & sugar 7.90 1.03 6.87
10 Reimbursement -7.00 -7.00
10 Stationery 10.60 1.38 9.22
13 Cake 19.90 2.60 17.30
14 Taxi fare 6.90 0.90 6.00
15 Courier fee 7.90 1.03 6.87
16 Toilet paper 3.50 0.46 3.04
17 Vodafone 15.00 1.96 13.04
20 Milk 1.80 0.23 1.57
21 Biscuits 2.60 0.34 2.26
22 Handee towels 3.40 0.44 2.96
23 Coffee 4.20 0.55 3.65
24 Courier fee 10.50 1.37 9.13
24 Milk 1.80 0.23 1.57
28 Postage 6.00 0.78 5.22
30 Cleaning supplies 4.40 0.57 3.83
30 Cash short 0.90 0.90
158.90 151.60 19.63 42.09 10.79 12.47 34.27 19.31 13.04 0.00
Carl Chainey
trading as Chainey's Mowers
Petty Cash
for the month ended 30 April 2012
Staff
amenitie Genera Stationer Vehicl
Date Details Receipts Expenditure GST s Cleaning l Postage y e Drawings
1 Opening balance 39.60
1 Trade & Exchange 5.90 0.77 5.13
1 Postage stamps 10.00 1.30 8.70
2 Tea, milk, biscuits 6.30 0.82 5.48
5 Panadol & Bandaids 8.50 1.11 7.39
6 Cash short 0.40 0.40
6 Reimbursement 61.50
7 Courier fee 7.90 1.03 6.87
8 Cleaning supplies 5.20 0.68 4.52
8 Milk 1.80 0.23 1.57
13 Carl 10.00 10.00
13 Petrol 10.00 1.30 8.70
14 Flowers 15.00 1.96 13.04
14 Stationery 11.20 1.46 9.74
15 Milk 1.80 0.23 1.57
16 Trade & Exchange 5.90 0.77 5.13
19 Carl -10.00 -10.00
19 Toilet paper 3.90 0.51 3.39
20 Parking meter 2.00 0.26 1.74
21 Milk & coffee 4.60 0.60 4.00
21 Reimbursement 69.30
23 Postage stamps 5.00 0.65 4.35
26 Rubbish dump 18.00 2.35 15.65
26 Key cutting 7.50 0.98 6.52
27 Milk and biscuits 7.60 0.99 6.61
28 Screws 10.90 1.42 9.48
29 Sellotape 2.40 0.31 2.09
30 Trade & Exchange 5.90 0.77 5.13
30 Cash short 1.90 1.90
170.40 159.60 20.50 43.05 20.17 33.69 19.92 11.83 10.44 0.00
• can alert the business of any transactions that have been recorded for the
wrong amount. For example, a cheque may have been written for $735, but
incorrectly recorded in the accounting records as being for $753.
• is an internal control that can help prevent theft by employees. If they know
the accounting records for receipts are being reconciled to banking records
there is a deterrent for theft of money.
7.9
Cash receipts journal
Date Details Ref Bank
2012
April 3 J Small 41 53.50
April 7 B Johnston 42 105.30
April 10 M James 43 63.50
April 21 L Smith 44 86.90
April 25 R Max 45 83.20
April 29 S Black 46 36.00
April 30 T Jacks 47 43.50
April 30 C O’Driscoll 48 13.00
April 30 Interest 7.90
492.80
1100 – Dr
General ledger
Bank 1100
Date Details Ref Dr Cr Bal
1 April Opening 247.50 Cr
30 April Cash receipts CRJ 492.80 245.30 Dr
30 April Cash payments CPJ 376.60 131.30 Cr
7.10 (a)
General journal Page 1
⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯
Date Account titles Debit Credit
⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯
2012 $ $
Aug 26 Purchases 5200 15.65
GST paid 2330 2.35
Bank 1100 18.00
Being entry required to record
correction of cheque 1078 – previously
recorded as $224.30 instead of $242.30
7.11 (a)
Bank
Date Details Ref Dr Cr Bal
1 August Opening balance 1,286 Dr
31 August Cash receipts CRJ1 10,840 12,126 Dr
31 August Cash payments CPJ1 13,148 1,022 Cr
(b) Bank
Date Details Ref Dr Cr Bal
31 March Balance b/d 594.60 Dr
2 March Rent/GST GJ1 1,000.00 405.40 Cr
4 March Subs/GST GJ1 9.00 396.40 Cr
17 March Bank charges GJ1 32.60 429.00 Cr
23 March Acc receivable GJ1 48.00 477.00 Cr
31 March Interest GJ1 9.50 467.50 Cr
7.13
(a) General journal Page 1
⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯
Date Account titles Ref Debit Credit
⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯
2012 $ $
Nov 10 Accounts receivable 1200 150.00
Bank 1100 150.00
Being entry required to record
dishonoured cheque
(b) Bank
7.14 Internal control systems can only help to prevent fraud, they cannot ensure that it
doesn’t occur. If a business has good controls, it is harder for employees to
commit fraud, but if two or more employees work together they can still get
around the internal controls. This is because separation of duties doesn’t help if
employees are working together.
7.15 One internal control rule is that all receipts should be banked intact. By paying
staff part of their wages from cash receipts this internal control rule is being
broken. It is possible to complete a weekly wages schedule and vary the amount
paid to staff by direct credit, or staff could be paid by internet transfer each week.
If staff members want to continue receiving part of their wages in cash then a
cheque should be cashed each week to pay the balance of the wages, rather than
using cash from the till. Using cash from the till runs the risk that both income
and wages will be incorrectly recorded in the financial statements.
7.16 Jack, bank reconciliations are necessary even with internet banking. There can be
differences between the bank ledger account and the bank statement for a number
of reasons:
• Cheques and deposits may not have been presented or deposited into the bank
before the statement date.
• A cheque or deposit could have been recorded incorrectly in the cash journals.
If bank reconciliations are not conducted there is a risk that you may not, for
example, realise that a cheque you wrote out some time ago has not yet been
presented. If that cheque is then presented you may go over your overdraft limit.
This may cause the bank to dishonour cheques or automatic payments and charge
you additional bank fees.
Errors made by either you in your accounting records or by the bank may not be
detected if bank reconciliations are not carried out on a regular basis.
Some transactions will be first recorded on the bank statement, such as internet
transfers in, bank fees, bounced cheques, and so on. If you don’t complete bank
reconciliations these transactions may be overlooked in the accounting system.
The need for bank reconciliations has, if anything, increased with the greater
reliance on internet transfers and automatic banking transactions.
Just knowing your bank account balance does not give you enough information or
control.
7.17 Cash sales should be banked intact. This means that all cash receipts should be
banked, and none of the money received should be used to pay for expenses. If
this is not done there is risk that both income and expenditure will be incorrectly
recorded.
7.18 A business may decide to encourage customers to use EFTPOS to pay for
transactions, rather than pay by cash or cheque. If customers pay by cash the
business then has the problems of counting the money and physically banking it
into their account. They also have the risk of extra cash on hand, which may make
them a more likely target for robbery. If customers pay by cheque there is always
a risk that the cheque will bounce — that is, that the customer will have
7.19 This is not acceptable from an internal control perspective. If the cashier was
dishonest they could personally keep money received from a debtor, and then
write off the debt in Horizon Ltd’s books. Horizon Ltd would then have no way of
finding out that the cashier had taken the money because the account had been
written off. This illustrates clearly why the separation of duties is so important.
7.20 This situation is not ideal from an internal control perspective. If money went
missing the employer would have no idea who was responsible. If possible each
staff member should have their own cash register.