OPEN UNIVERSITY FOR ADULTS

Subject:
Accounting II
Issue:
Practice 6
Competitor:
Elvira Chevalier
Tuition:
18-01179
Belonging to:
Business School.
Facilitator:
Marlon Anzellotti, MA
Date:
May 26, 2018.
 1. Prepare a teaching scheme that contains the components of internal
control. Perform the following exercises: P7-25A page 415, P7-27A
page 416, P7-28A page 417 and P7-30A page 418 and go up to the
platform for this option.

P7-25A (Learning Objectives 1, 2, 3, 4) Internal control, components,

procedures and laws [20 to 25 min]

Terms

1. Internal control J
2. Control procedures K
3. Safety barriers E
4. L- coding
5. M control environment
6. Information system I
7. Separation of responsibilities F
8. Controls Supervision A
9. Documents D
10. H Audits
11. Operational efficiency B
12. G risk assessment
13. Sarbanes-Oxley C Act
Definitions

TO. What internal and external auditors do.

b. Part of internal control that ensures that resources are not wasted.

c. Law requiring internal control systems to be tested.

d. Provides details of business transactions.

AND. Limit access to a local network.

F. Control procedure divides duties between two or more people.

g. Identification and evaluation of threats to the business.

H. It can be internal and external.

YO. Components of internal control that help ensure that decision makers
receive accurate data.
J. Organizational plans and all related measures that safeguard assets,
motivate employees to follow company policies, promote operational efficiency,
and ensure accurate and reliable accounting data.

K. Components of internal control that help ensure that business goals are
achieved.

L. Reorders the data through a mathematical process.

M. The “level or tone of senior management.”

1 required. Match the terms with their definitions.

P7-27A (Learning Objective 6) Preparing a Bank Reconciliation and

Journal Entries [20-25 min] Below are the April cash records for Donald
Insurance:

Cash receipts Payments in cash

Date Charge to cash Checks No. Cash payment
April 4 4,160 1416 860
April 9 530 1417 140
April 14 520 1418 670
April 17 2,170 1419 1,290
April18 1,860 1420 1,450
1421 800
1422 660

Donald Insurance's Cash account shows a balance of $17,040 as of April

30. On April 30, Donald Insurance received the following bank statement:

April bank statement

Initial balance 13,700
Deposits and other payments:
Apr 1 TEF 500
5 4,160
10 530
15 520
18 2,170
22 B.C. 1,600 9,480

Checks and other expenses:

Apr 8 CHFI 900
 11 (check no. 890
1416)
19 CHFI 200
22 (check no. 140
1417)
29 (check no. 670
1418)
30 (check no. 1,920
1419)
30 S.C. 30 4,750
Final balance 18,430

Additional data for bank reconciliation:

The TEF payment was for the collection of rent. The TEF charge was for an
insurance payment.

The insufficient funds check was received from a customer.

The bank collection of $1,600 was for a note receivable.

The correct amount of the rental expense check 1419 is $1,920. Donald's
comptroller mistakenly recorded the check for $1,290

Is required

1. Prepare the bank reconciliation for Donald Insurance as of April 30,

2011.

Donald Insurance

Bank reconciliation

As of April 30, 2011

Bank:
Balance, April 30, 2011 18,430.00
More: Deposit from April 30 in transit 1,860.00
Total 20,290

Less: Checks in circulation issued on (2,910)

April 30 (2,910)
Adjusted balance, April 30, 2011 17,380

Books:
Balance, April 30, 2011 17,040
More: Bank charge for leftover 1,600
documents 500
TEF Rent collection
Total 19,140

Less: Check insufficient fund 900

TEF insurance payment 200
Service charge 30 -1,760
Error (1920-1290) 630
Adjusted book balance, April 30, 17,380
2011

2. Journalize any entries required for the bank reconciliation.

Donald Insurance
General diary
As of April 30, 2011
Date Description Debit Credit
April 30th Cash 1,600
@
Doc x charge 1,600
Reg. Document
receivable already
collected by the bank
April 30th Miscellaneous expense 30
@
Cash 30
Reg. Banking charges
April 30th Account Receivable 900
Donald Insurance
@ 900
Cash
Reg. Check with fund.
Insuf. Bank discount
April 30th Cash 500
@
Rent expense 500
Reg. Monthly rent
collection
April 30th Insurance expense 200
@
Cash 200
Reg. Monthly insurance
expense
P7-28A (Learning Objective 6) Preparing a Bank Reconciliation and
Journal Entries [20 min] The bank statement just arrived from Federal
Bank as of May 31, for Wood's Healthcare. To prepare the bank
reconciliation, you collect the following data. Data list:

1. The balance as of May 31 is $4,860.

2. The bank statement includes two charges for insufficient funds checks
from customers. One is for $380 (#1); and the other, for $100 (#2).
3. The following Wood checks are outstanding as of May 31.
Check no. Amount
237 60
288 180
291 570
294 600
295 60
296 130

1. Wood collects from some clients through TEF.

2. The May bank statement shows a TEF deposit of $1,100 for a collection
on account.
3. The bank statement includes two special deposits that Wood has not yet
recorded: $870, for dividend income; and $10, for interest income Wood
earned on his bank balance during May.
4. The bank statement shows a subtraction of $40 for banking service
charges.
5. On May 31, Wood's treasurer deposited $300, but this deposit does not
appear on the bank statement.
6. The bank statement includes a deduction of $900 for a check drawn on
Multi-State Freight Company. Wood notified the bank of this banking
error.
7. Wood's Cash account shows a balance of $3,000 as of May 31.

Is required

1. Prepare the bank reconciliation for Wood's Healthcare as of May 31, 2012.

2. Journalize any entries required for the bank reconciliation. Include an

explanation for each entry.
P7-30A (Learning Objective 9) Accounting for Petty Cash Transactions
[20-30 min] On November 1, Fab Salad Dressings creates a petty cash
fund with a comprehensive balance of $400. During November, Sunny
Lewis, the fund's custodian, signs the following petty cash vouchers:

Petty cash voucher Concept Amount

number
101 Office supplies 20
102 Executive taxi fare 15
103 Package delivery in the 25
city
104 Money for a meal with
the mayor
105 Inventory 30
70

On November 30, before replenishment, the fund contains these more

effective vouchers for $245. The accounts affected by payments from the
petty cash fund are Office Supplies Expense, Travel Expenses, Delivery
Expenses, Entertainment Expense, and Inventories.

Is required

1. Explain the characteristics and internal control considerations of a

comprehensive fund.

2. As of November 30, how much cash should the petty cash fund hold before it
is replenished?

3. Journalize all entries necessary to create the fund and replenish it. Include
explanations.

4. Make the entry on December 1 to increase the fund balance to $450. Include
an explanation and briefly describe what the custodian does.

REVIEW