Part 3
In a banking context, a debit memo is notification from the bank that it has
debited the depositor’s account. Since the depositor’s account is a liability of the
bank (a credit balance account), the debit notification means the bank has
reduced the depositor’s account balance. Conversely, a credit memo is a
notification that the depositor’s account has been credited, which means the
bank has increased the depositor’s cash balance.
Problem 8-5B (50 minutes)
Part 1
SHAMARA SYSTEMS
Bank Reconciliation
May 31, 2015
Bank statement balance……… $21,762.70 Book balance …………………………………………………………………………$15,177.30
Add Add
Deposit of May 31……………. 2,727.30
Proceeds of note less
Part 2
May 31 Cash…………………………………………………………………..7,350.00
Collection Expense……………………………………………..50.00
Notes Receivable………………………………………….. 7,400.00
To record note collection less fee.
Problem 8-5B (Concluded)
Part 3
There are several possible reasons why some prenumbered checks are
missing from the sequence of canceled checks returned with a bank
statement. Reasons include:
(1) Some of the checks in the numbered sequence may have cleared the
(2) Some of the checks in the numbered sequence may remain
(3) The issuer of the checks may have voided one or more of the checks
(4) Occasionally, a check will reach the bank but the bank will incorrectly
SERIAL PROBLEM — SP 8
Serial Problem — SP 8, Business Solutions (50 minutes)
Part 1
BUSINESS SOLUTIONS
Bank Reconciliation
March 31, 2016
Bank statement balance….. $67,566 Book balance………………………………………………………………………….$68,057
Add Add
Part 2
Mar. 25 Miscellaneous Expenses……………………………………..677 50
Cash……………………………………………………………..101 50
To record safety deposit box rental.
Reporting in Action — BTN 8-1
1.
($ in millions)
Balance
September
28, 2013
Cash and
equivalents
as % of:
Balance
September
29, 2012
Cash and
equivalent
s as % of:
Cash and cash
equivalents………….. $ 14,259 — $ 10,746 —
Current assets……….. 73,286 19.5% 57,653 18.6%
Analysis comment: Cash and cash equivalents have slightly increased
as a percent of the various bases over this period. Looking at this
measure only, Apple’s liquidity position has probably slightly improved.
2. Per the statement of cash flows for year ended September 28, 2013
($ millions):
Cash and equivalents, beginning-year…………… $10,746
Cash and equivalents, year-end……………………..$14,259
Reporting in Action (Concluded)
3. Days’ Sales Uncollected ($ thousands)
Days’ sales uncollected = x 365
The number of days of uncollected sales in accounts receivable has
increased from 25.49 days to 27.98 days. This increase of 2.49 days
indicates that the company’s assets are tied up in receivables for a
longer period of time.
4. Solution depends on the annual report information obtained.
Accounts receivable
Net sales
Comparative Analysis — BTN 8-2
Apple ($ millions)
Apple’s days’ sales uncollected has increased by 2.49 days. The
Google ($ millions)
Google’s days’ sales uncollected has decreased by 3.2 days. The
Comparative Analysis: Google’s decrease in days’ sales uncollected is
Accounts receivable
Net sales
Ethics Challenge — BTN 8-3
1. In a small business office it is very important that the owner of the
2. Unfortunately, due to collusion of the employees, the bank
3. Despite the collusion, the scheme is not foolproof. For example, some
ways in which the scheme might be uncovered or prevented include the
following:
A bank employee may become suspicious and call Dr. Conrad and
An astute patient might notice that his/her statement contains a
Dr. Conrad might be able to detect the fraud herself if she reviews the
Dr. Conrad could require approval for each miscellaneous credit.
4. Dr. Conrad should review her salary schedules for employees to make
sure that she is at least offering market pay. She may want to consider