Exercise 8-6 (20 minutes)
1.
To establish a petty cash fund.
2.
Jan. 8 Postage Expense………………………………………….. 74
To reimburse the petty cash fund.
*Transportation-in costs are included in Merchandise
Inventory under a perpetual system.
3.
Jan. 8 Postage Expense………………………………………….. 74
To reimburse the petty cash fund.**
To increase the petty cash fund.**
** The two January 8 entries can be combined into one entry.
Exercise 8-7 (10 minutes)
1. The voucher system of control establishes procedures for: (a) Verifying,
3. The voucher is initially prepared by the accounting department when it
receives the purchase requisition from the department making the
Exercise 8-8 (20 minutes)
Bank
Balance
Book Balance Not Shown on
Add Deduct Add Deduct Adjust Reconciliation
1. NSF check from customer returned
on Sept. 25 but not recorded by this
company.
x Cr.
2. Interest earned on the account. x Dr.
3. Deposit made on September 5 and
processed by bank on September 6. x
Exercise 8-9 (25 minutes)
DEL GATO CLINIC
Bank Reconciliation
June 30, 2015
Bank statement balance. . $10,555 Book balance………………………………………………………………………….$11,589
Add Add
Exercise 8-10 (10 minutes)
June 30 Cash………………………………………………………… 9
Exercise 8-11 (25 minutes)
WRIGHT COMPANY
Bank Reconciliation
May 31, 2015
Bank statement balance. . $25,800 Book balance………………………………………………………………………….$27,500
Add
Exercise 8-12 (15 minutes)
(a) Days’ sales uncollected on December 31, 2014:
Days’ sales uncollected on December 31, 2015:
(b)Evaluation: The change from 32.5 to 41.0 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 2014, this has increased by 8.5 days in 2015. The company
needs to follow up to identify the reasons for this change.
$65,000
$730,000
$123,000
$1,095,000
Exercise 8-13A (10 minutes)
Exercise 8-14B (25 minutes)
a. Recording inventory at gross amounts
Oct. 2 Merchandise Inventory………………………………………..3,000
Accounts Payable…………………………………………. 3,000
To record merchandise purchases.
10 Accounts Payable………………………………………………. 500
Merchandise Inventory …………………………………. 500
To record credit memo for returns.
Exercise 8-14B (Concluded)
b. Recording inventory at net amounts
Oct. 2 Merchandise Inventory………………………………………..2,940
Accounts Payable…………………………………………. 2,940
To record merchandise purchases less
discount [$3,000 – ($3,000 x .02) = $2,940].
10 Accounts Payable………………………………………………. 490
Merchandise Inventory………………………………….. 490
* This entry could alternatively be recorded on October 31 when the cash payment is
PROBLEM SET A
Problem 8-1A (20 minutes)
1. Violates separation of duties. The company should implement a policy
2. Violates the principle of establishing responsibility. Only Julia should
3. Violates the proper application of technological controls. While the daily
backup is a very good internal control, the tape needs to be taken off the
4. Violates regular and independent review. Benedict Shales needs to
5. Violates the insuring of assets and the bonding of key employees. We
do not have enough information to know if the company can afford the
Problem 8-2A (20 minutes)
Part 1
May 1 Petty Cash………………………………………………………….300.00
May 15 Janitorial Expenses……………………………………………. 88.00
Miscellaneous Expenses…………………………………….. 53.68
May 16 Petty Cash………………………………………………………….200.00
Note: The May 31 entries can be combined into one entry.
May 31 Postage Expenses………………………………………………147.36
Mileage Expense………………………………………………… 23.50
May 31 Cash…………………………………………………………………..100.00
Part 2
If the May 31 replenishment is not made and no entry is recorded, then
Problem 8-3A (30 minutes)
Part 1
Part 2
Nakashima Gallery
Petty Cash Payments Report (for February)
Delivery expense
Feb. 23 Delivery of customer’s merchandise……………………. $ 20.00
Mileage expense
* Transportation-in costs are included in Merchandise Inventory under a perpetual system.
Part 3
Feb. 28 Delivery Expense………………………………………………..20.00
Mileage Expense…………………………………………………68.00
Postage Expense………………………………………………..61.95
Feb. 28 Petty Cash………………………………………………………….100.00