Professional Documents
Culture Documents
Full download Financial Accounting Information for Decisions 6th Edition Wild Solutions Manual all chapter 2024 pdf
Full download Financial Accounting Information for Decisions 6th Edition Wild Solutions Manual all chapter 2024 pdf
Full download Financial Accounting Information for Decisions 6th Edition Wild Solutions Manual all chapter 2024 pdf
https://testbankfan.com/product/financial-accounting-information-
for-decisions-6th-edition-wild-test-bank/
https://testbankfan.com/product/financial-accounting-information-
for-decisions-9th-edition-wild-solutions-manual/
https://testbankfan.com/product/financial-accounting-information-
for-decisions-7th-edition-wild-solutions-manual/
https://testbankfan.com/product/financial-accounting-information-
for-decisions-8th-edition-john-wild-solutions-manual/
Financial Accounting Information for Decisions 7th
Edition Wild Test Bank
https://testbankfan.com/product/financial-accounting-information-
for-decisions-7th-edition-wild-test-bank/
https://testbankfan.com/product/financial-and-managerial-
accounting-information-for-decisions-5th-edition-wild-solutions-
manual/
https://testbankfan.com/product/financial-accounting-information-
for-decisions-8th-edition-john-wild-test-bank/
https://testbankfan.com/product/financial-and-managerial-
accounting-information-for-decisions-5th-edition-wild-test-bank/
https://testbankfan.com/product/financial-accounting-
fundamentals-6th-edition-wild-solutions-manual/
Chapter 6
Reporting and Analyzing Cash and
Internal Controls
QUESTIONS
1. The seven broad principles are: Establish responsibilities; Maintain adequate records;
Insure assets and bond key employees; Separate recordkeeping from custody of assets;
Divide responsibilities for related transactions; Apply technology controls; Perform
regular and independent reviews.
2. Internal control procedures become especially critical when the manager of a business
can no longer control the business through personal supervision and direct
participation.
3. Responsibility for related transactions should be divided so that the work of one
department or individual acts as a check on that of another.
4. Separation of custody from recordkeeping of an asset encourages the asset custodian to
avoid misplacing, misappropriating, or wasting the asset. This arrangement makes
collusion necessary if an asset is to be stolen and the theft concealed in the records.
5. If individual departments were permitted to deal directly with suppliers, the amount of
merchandise purchased and the resulting liabilities would not be well controlled. Having
individual departments place orders through a purchasing department helps control the
amounts purchased and the resulting liabilities.
6. The limitations of internal control arise from two sources: the human element (human
error or human fraud) and the cost-benefit principle.
7. Cash is most liquid; and least liquid is a building. The four assets ordered from most to
least liquid are: cash, accounts receivable, inventory, and building.
8. A petty cash receipt is a document stating that a payment has been made from petty
cash. The one who received payment and the one who approved payment both sign the
receipt.
9. Depositing all receipts on the day of receipt (1) creates an independent record of the
amount of cash received and (2) helps prevent an employee from having personal use of
the money for a period of time before depositing it.
10. During the year ended February 27, 2010, cash (and equivalents) of $1,470,127 thousand
is used by investing activities. Cash (and equivalents) of $843,381 thousand is used by
financing activities.
13. Palm’s cash and equivalents decreased by $24,518 thousand during the fiscal year
ended May 31, 2009; specifically, from $176,918 thousand to $152,400 thousand. Its
statement of cash flows identifies the three major sources and uses of its cash flows: (1)
$188,512 thousand used by operating activities; (2) $38,119 thousand used in investing
activities; and (3) $204,015 thousand generated by financing activities. (Although not
required, students might also identify the effects of exchange rate changes on cash and
cash equivalents accounting for a decrease of $1,902 thousand.)
QUICK STUDIES
2. (a) Voucher system of control, and (b) Petty cash system of control.
1. The cash category includes currency and coins along with the amounts
on deposit in bank accounts, checking accounts, and savings
accounts. Cash also includes items that are acceptable for deposit in
these accounts including customer checks, cashier checks, certified
checks, and money orders.
Accounts receivable
Days' sales uncollected = x 365
Net sales
2011 2010
$75,692 $70,484
$2,591,933 x 365 $2,296,673 x 365
10.7 days 11.2 days
(b) The advantage of this method is that the Discounts Lost account
highlights for management (on the income statement) the costs
incurred by the business that have resulted from the failure to take
cash discounts. Management can then determine the reason and
possibly correct the handling of future cash payments to ensure that all
favorable purchase discounts are taken.
2. The employee should sign a receipt for the total amount of cash he or
she is given each weekend. Each time the employee makes a
purchase, he or she should obtain a signed sales receipt for the
payment. The sales receipt should list the items purchased and the
prices paid. When the employee returns to the store, the total value of
the signed sales receipts plus any remaining cash should equal the
amount of cash originally given to the employee. Also, the
merchandise brought back by the employee should be the same as the
items listed on the signed sales receipts.
Evaluation
The company’s internal control system failed to require separation of asset
custody from asset recordkeeping.
Principles Ignored
(1) The recordkeeper should not have been allowed to sign the company’s
checks.
(2) Since a loss was incurred, the company apparently had not bonded its
employee. If it had, the bonding company would have insured the loss.
If regular, independent reviews of the accounting records had been done,
the payments of salary checks to a nonemployee may have been
discovered earlier.
2.
Sept. 30 Merchandise Inventory* ......................................... 32
Postage Expenses .................................................. 113
Miscellaneous Expenses ....................................... 87
Cash Short and Over .............................................. 2
Cash ................................................................... 234
To reimburse the petty cash fund.
* Transportation-in costs are included in the Merchandise
Inventory account under a perpetual system.
3.
Oct. 1 Cash ......................................................................... 100
Petty Cash ......................................................... 100
To decrease the petty cash fund.
2.
Jan. 8 Postage Expense .................................................... 64
Merchandise Inventory* ......................................... 19
Delivery Expense .................................................... 36
Miscellaneous Expense ......................................... 53
Cash ................................................................... 172
To reimburse the petty cash fund.
* Transportation-in costs are included in Merchandise Inventory
under a perpetual system.
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
$83,000
$647,000 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.
1. B 3. A 5. C
2. D 4. F 6. E
* This entry could alternatively be recorded on October 31 when the cash payment is
made (this is likely since the invoice was filed incorrectly).
Part 2
Part 2
Shelton Gallery
Petty Cash Payments Report
Delivery expense
Feb. 23 Delivery of customer's merchandise ......................... $ 18.00
Mileage expense
Feb. 14 Reimbursement for mileage ........................................ 58.00
Postage expense
Feb. 12 Express delivery of contract .......................................
$ 9.95
Feb. 27 Purchased postage stamps ........................................
64.00 73.95
Merchandise inventory (transportation-in)*
Feb. 9 COD charges on purchases ........................................
22.50
Feb. 25 COD charges on purchases ........................................
15.10 37.60
Office supplies expense
Feb. 5 Purchased paper for copier ........................................ 10.13
Feb. 20 Purchased stationery...................................................
77.76 87.89
Total $275.44
* Transportation-in costs are included in Merchandise Inventory under a perpetual system.
Part 3
Feb. 28 Delivery Expense .........................................................18.00
Mileage Expense ..........................................................58.00
Postage Expense .........................................................73.95
Merchandise Inventory ................................................37.60
Office Supplies Expense .............................................87.89
Cash Over and Short ................................................... 3.33
Cash ........................................................................ 278.77
To reimburse the petty cash fund.
28 Petty Cash ....................................................................
100.00
Cash ........................................................................ 100.00
To increase the petty cash fund.
Instructor note: The two entries on Feb. 28 can be combined into one.
CLARK COMPANY
Bank Reconciliation
July 31, 2011
Bank statement balance ............ $28,020 Book balance...................................................................................
$26,193
Add: Add:
Deposit of July 31..................... 10,152 Proceeds of note less
38,172 collection charge......................................................................
8,955
35,148
Deduct: Deduct:
Checks No. 3031...... $1,380 NSF check ...................... $ 805
3065...... 336 Service charge ............... 15
3069...... 2,148 3,864 Error (Check 3056)........ 20 840
Adjusted bank balance .............. $34,308 Adjusted book balance................................................................
$34,308
Part 2
Part 3
b. The bank's collection of the $9,000 note less the $45 collection fee
should have been added to the book balance of cash. Instead, it was
added to the bank statement balance. As a result:
(i) The final balance that results from adjusting the bank statement
balance will be overstated by $8,955; and
(ii) The final balance that results from adjusting the book balance
will be understated by $8,955.
Part 2
30 Cash ..............................................................................
1,385.00
Collection Expense ...................................................... 15.00
Note Receivable ..................................................... 1,400.00
To record note collection less fee.
Tuli paloi ilosesti ja Aslak haki eväänsä esille. Hän levitti yhden
taljoista allensa ja ryhtyi syömään.
Uskottoman tieva!
Ei vastausta.
Salkko Hukka. Niin, hän oli pahin Aslak Roston vihamies. Ja se oli
kumma, että heidän sukunsa olivat jo monessa polvessa olleet
toistensa vihamiehiä. Niin olivat olleet vanha Rosto ja vanha Salkko,
niin myös heidän isänsä. Mistä se johtui, sitä ei Aslak varmuudella
tiennyt. Isänsä oli kertonut, että vanhoista ajoista olivat Hukat ja
Rostot olleet palkistensa etevimpiä lappalaisia. Viimemainituilla oli
aina ollut suhteellisesti paremmat jäkälämaat kuin edellisillä, joiden
jutama-alue [liikkumisalue] oli seurakunnan länsipäässä, missä myös
Norjan lappalaiset laidunsivat porojaan ja rasittivat maita enemmän
kuin ne olisivat kestäneet. Vanha Hukka oli kerran esittänyt koko
kunnan aluetta yhdeksi palkiseksi, mutta sitä oli vanha Rosto kynsin
hampain vastustanut. Asia oli rauennut myrskyisen kokouksen
jälkeen, jossa Hukan puolue oli jäänyt vähemmistöön. Hänen
poikansa Salkko oli kuitenkin päässyt Roston palkisen jäseneksi,
tiesi miten, mutta siellä hän nyt oli jo ollut kohta vuosikymmenen.
Vanha vihamielisyys ei kuitenkaan ollut senkautta heikentynyt,
päinvastoin.
Huh!… Sen yön jälkeen hän oli odottanut synnin mitan täyttymistä,
odottanut peläten ja vavisten, mutta ei mitään ollut tapahtunut… ei
mitään. Sama rauha kuin ennenkin. Taisi olla satua koko juttu…
Mistä lie Rauna-muori sen onkinutkin?… Synnin mitta… synnin
mitta!… Sitä se vaan hoki… joka näkemässä… akanhöperö!
— Uuooaa!
Se oli pitkää ja sanomattoman valittavaa. Aslak oli kuullut tuon
äänen usein, mutta nyt herätti se hänessä niin kummallisen oudon
kammon. Häntä värisytti ja kylmä hiki kihosi otsalle.
Mikä elukalle tuli? Ennen niin siivo ja nyt kuin hullu. Pelkäsikö se
niin tavattomasti hukan huutoa? Vai oliko tämä vuoma loihdittu?
Tuli taas järvi ja poro karahutti pitkässä tolvassa jäälle. Siellä sen
vauhti vähitellen hiljeni ja tuokion mentyä kulki se aivan rauhallisena,
kuin ei olisi milloinkaan yrittänytkään oikuttelemaan.
*****