Accounting Assignment_ Chapter 7 Homework 2016

| March 29, 2017

Question
Brief Exercise 7­4
The internal control procedures in Valentine Company provide that:
Identify the principles of internal control that are being followed.
1.
Employees who have physical custody of assets do not have access to the
accounting records.
2.
Each month, the assets on hand are compared to the accounting records by an
internal auditor.
3.
A pre numbered shipping document is prepared for each shipment of goods to
customers.
Brief Exercise 7­5
Rosenquist Company has the following internal control procedures over cash receipts.
Identify the internal control principle that is applicable to each procedure.
1. All over­the­counter receipts are entered in cash registers.
2. All cashiers are bonded.
3. Daily cash counts are made by cashier department supervisors.
4.
The duties of receiving cash, recording cash, and custody of cash are assigned to
different individuals.
5. Only cashiers may operate cash registers.
Exercise 7­7
Setterstrom Company established a petty cash fund on May 1, cashing a check for $125. The company
reimbursed the fund on June 1 and July 1 with the following results.
June 1: Cash in fund
$3.55.
Receipts: delivery expense $27.45, postage expense $36.25, and miscellaneous
expense $55.60.
July 1: Cash in fund
$4.15.
Receipts: delivery expense $18.90, entertainment expense $52.25, and miscellaneous
expense $49.70.
On July 10, Setterstrom increased the fund from $125 to $155.
Prepare journal entries for Setterstrom Company. (Credit account titles are automatically indented when
amount is entered. Do not indent manually. Record journal entries in the order presented in the
problem. Round answers to 2 decimal places, e.g. 52.75.)
Date Account Titles and Explanation Debit Credit
June 1
July 1
Exercise 7­8
Horvath Company uses an imprest petty cash system. The fund was established on March 1 with a balance of
$110. During March, the following petty cash receipts were found in the petty cash box.
Date Receipt No. For Amount
3/5 1 Stamp Inventory $38
7 2 Freight­Out 20
9 3 Miscellaneous Expense 14
11 4 Travel Expense 23
14 5 Miscellaneous Expense 8
The fund was replenished on March 15 when the fund contained $5 in cash. On March 20, the amount in the
fund was increased to $195.
Journalize the entries in March that pertain to the operation of the petty cash fund. (Credit account titles are
automatically indented when amount is entered. Do not indent manually. Record journal entries in
the order presented in the problem.)
Date Account Titles and Explanation Debit Credit
Mar. 15
Exercise 7­9 (Part Level Submission)
Don Wyatt is unable to reconcile the bank balance at January 31. Don’s reconciliation is as follows.
Cash balance per bank $3,860.20
Add: NSF check 540.00
Less: Bank service charge 33.00
Adjusted balance per bank $4,367.20
Cash balance per books $4,175.20
Less: Deposits in transit 680.00
Add: Outstanding checks 938.00
Adjusted balance per books $4,433.20
(a)
Prepare a correct bank reconciliation. (List items that increase cash balance first. Reconcile cash
balance per bank first. Round answers to 2 decimal places, e.g. 52.75.)
Don Wyatt
Bank Reconciliation
January 31
$
:
:
$
$
:
$
$
(b)
Journalize the entries required by the reconciliation. (Credit account titles are automatically indented
when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 52.75.)
No. Account Titles and Explanation Debit Credit
1.
(To record NSF check.)
2.
(To record bank service charge.)
Exercise 7­12 (Part Level Submission)
The information below relates to the Cash account in the ledger of Minton Company.
Balance September 1—$17,320? Cash deposited—$64,280.
Balance September 30—$18,404? Checks written—$63,196.
The September bank statement shows a balance of $17,422 on September 30 and the following memoranda.
Credits Debits
Collection of $1,990 note plus interest $40 $2,030 NSF check: Richard Nance $925
Interest earned on checking account $55 Safety deposit box rent $75
At September 30, deposits in transit were $4,950, and outstanding checks totaled $2,883.
(a)
Prepare the bank reconciliation at September 30. (List items that increase cash balance first. Reconcile
cash balance per bank first.)
MINTON COMPANY
Bank Reconciliation
September 30
$
:
:
$
$
:
$
:
$
(b)
Prepare the adjusting entries at September 30, assuming (1) the NSF check was from a customer on account,
and (2) no interest had been accrued on the note. (Credit account titles are automatically indented when
amount is entered. Do not indent manually.)
Date Account Titles and Explanation Debit Credit
Sept. 30
(To record note receivable.)
Sept. 30
(To record interest earned.)
Sept. 30
(To record NSF check.)
Sept. 30
(To record safety deposit rent.)
Problem 7­2A (Part Level Submission)
Forney Company maintains a petty cash fund for small expenditures. The following transactions occurred over a
2­month period.
July 1 Established petty cash fund by writing a check on Scranton Bank for $205.
15 Replenished the petty cash fund by writing a check for $201.30. On this date the fund consisted of
$3.70 in cash and the following petty cash receipts: freight­out $93.00, postage expense $40.80,
entertainment expense $47.10, and miscellaneous expense $18.80.
31 Replenished the petty cash fund by writing a check for $196.30. At this date, the fund consisted of
$8.70 in cash and the following petty cash receipts: freight­out $80.10, charitable contributions expense
$44.40, postage expense $43.60, and miscellaneous expense $28.20.
Aug. 15 Replenished the petty cash fund by writing a check for $191.60. On this date, the fund consisted of
$13.40 in cash and the following petty cash receipts: freight­out $73.40, entertainment expense
$41.40, postage expense $32.30, and miscellaneous expense $45.80.
16 Increased the amount of the petty cash fund to $325 by writing a check for $120.
31 Replenished the petty cash fund by writing a check for $308.70. On this date, the fund consisted of
$16.30 in cash and the following petty cash receipts: postage expense $139.20, travel expense $95.20,
and freight­out $72.50.
(a)
Journalize the petty cash transactions. (Credit account titles are automatically indented when amount is
entered. Do not indent manually. Record journal entries in the order presented in the problem. Round
answers to 2 decimal places, e.g. 52.75.)
Date Account Titles and Explanation Debit Credit
July 15
July 31
Aug. 15
Aug. 31
(b)
Post to the Petty Cash account.
Petty Cash
Date Explanation Ref. Debit Credit Balance
CP
CP
Problem 7­4A (Part Level Submission)
The bank portion of the bank reconciliation for Langer Company at November 30, 2017, was as follows.
LANGER COMPANY
Bank Reconciliation
November 30, 2017
Cash balance per bank $14,467.90
Add: Deposits in transit 2,530.20
16,998.10
Less: Outstanding checks
Check Number Check Amount
3451 $ 2,260.40
3470 720.10
3471 844.50
3472 1,426.80
3474 1,058.20 6,310.00
Adjusted cash balance per
bank
$10,688.10
The adjusted cash balance per bank agreed with the cash balance per books at November 30.
The December bank statement showed the following checks and deposits.
Bank Statement
Checks Deposits
Date Number Amount Date Amount
12­1 3451 $2,260.40 12­1 $ 2,530.20
12­2 3471 844.50 12­4 1,211.60
12­7 3472 1,426.80 12­8 2,365.10
12­4 3475 1,640.70 12­16 2,672.70
12­8 3476 1,300.00 12­21 2,945.00
12­10 3477 2,130.00 12­26 2,567.30
12­15 3479 3,080.00 12­29 2,836.00
12­27 3480 600.00 12­30 1,025.00
12­30 3482 475.50 Total $18,152.90
12­29 3483 1,140.00
12­31 3485 540.80
Total $15,438.70
The cash records per books for December showed the following.
Cash Payments Journal Cash Receipts Journal
Date Number Amount Date Number Amount Date Amount
12­1 3475 $1,640.70 12­20 3482 $475.50 12­3 $ 1,211.60
12­2 3476 1,300.00 12­22 3483 1,140.00 12­7 2,365.10
12­2 3477 2,130.00 12­23 3484 789.80 12­15 2,672.70
12­4 3478 621.30 12­24 3485 450.80 12­20 2,954.00
12­8 3479 3,080.00 12­30 3486 889.50 12­25 2,567.30
12­10 3480 600.00 Total $13,925.00 12­28 2,836.00
12­17 3481 807.40 12­30 1,025.00
12­31 1,690.40
Total $17,322.10
The bank statement contained two memoranda:
1. A credit of $5,245 for the collection of a $5,100 note for Langer Company plus interest of $160.00 and less
a collection fee of $15.00. Langer Company has not accrued any interest on the note.
2.
A debit of $581.00 for an NSF check written by L. Rees, a customer. At December 31, the check had not
been redeposited in the bank.
At December 31, the cash balance per books was $14,085.20, and the cash balance per the bank statement
was $21,846.10. The bank did not make any errors, but two errors were made by Langer Company.
(a)
Using the four steps in the reconciliation procedure, prepare a bank reconciliation at December 31. (Round
answers to 2 decimal places, e.g. 52.75. List items that increase cash balance first. Reconcile cash
balance per bank first.)
LANGER COMPANY
Bank Reconciliation
December 31, 2017
$
:
:
$
Date Account Titles and Explanation Debit Credit
Dec. 31
(To record collection of note receivable by bank)
Dec. 31
(To record NSF Check)
Dec. 31
(To correct error in recording check)
Dec. 31
(To correct error in deposit)
$
$
:
:
$
$
(b)
Prepare the adjusting entries based on the reconciliation. (Credit account titles are automatically indented
when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 52.75.
For error in check and deposit use accounts payable and accounts receivable.)

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