Type
Solution Manual
Book Title
Financial Accounting Fundamentals 5th Edition
ISBN 13
978-0078025754

978-0078025754 Chapter 6 Solution Manual Part 2

March 26, 2020
Exercise 6-14B (Concluded)
b.
Recording inventory at net amounts
Oct. 2
Merchandise Inventory ................................................
2,940
Accounts Payable ..................................................
2,940
To record payment for merchandise.
31
Accounts Payable ........................................................
2,500
Cash ........................................................................
2,500
To record payment for merchandise less returns
PROBLEM SET A
Problem 6-1A (20 minutes)
1. Violates separation of duties. The company should implement a policy
2. Violates the principle of establishing responsibility. Only Julia should
have access to the petty cash fund since she is the custodian. The
3. Violates the proper application of technological controls. While the
daily backup is a very good internal control, the tape needs to be taken
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 6-2A (20 minutes)
Part 1
May 1
Petty Cash ................................................................
300.00
Cash ........................................................................
To establish the $300 petty cash fund.
To reimburse the petty cash fund.
Part 2
Problem 6-3A (30 minutes)
Part 1
Feb. 2
Petty Cash ................................................................
400
Cash ................................................................
400
To establish the $400 petty cash fund.
Part 2
Nakashima Gallery
Petty Cash Payments Report (for February)
Delivery expense
Feb. 23
Delivery of customer's merchandise .........................
$ 20.00
Mileage expense
Feb. 14
Reimbursement for mileage ................................
68.00
* Transportation-in costs are included in Merchandise Inventory under a perpetual system.
Part 3
Feb. 28
Delivery Expense .........................................................
20.00
Mileage Expense ..........................................................
68.00
Problem 6-4A (30 minutes)
Part 1
BRANCH COMPANY
Bank Reconciliation
July 31, 2015
Bank statement balance .....
$27,233
Book balance ................................
$27,497
Add
Add
Part 2
July 31
Cash ..............................................................................
7,955
Collection Expense .....................................................
45
Notes Receivable ...................................................
8,000
To record note collection less fees.
Problem 6-4A (Concluded)
Part 3
a. If the company's Cash account balance of $27,497 is listed on the
bank reconciliation as $27,947 then:
(i) The final balance that results from adjusting the bank statement
b. The bank's collection of the $8,000 note less the $45 collection fee
Problem 6-5A (50 minutes)
Part 1
CHAVEZ COMPANY
Bank Reconciliation
September 30, 2015
Bank statement balance ........
$18,453.25
Book balance ................................
$17,404.20
Add
Add
Interest earned $ 12.50
Part 2
Sept. 30
Cash ................................................................
12.50
Interest Earned .......................................................
12.50
To record interest earned.
Problem 6-5A (Concluded)
Part 3
(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
PROBLEM SET B
Problem 6-1B (20 minutes)
1. Violates both applying technological control and effective segregation
of duties. It is safe to assume that Latisha Tally has knowledge of
employee passwords since she implemented the system of password
2. Violates applying technological controls. The theater’s system needs to
3. Violates segregation of duties. The company needs to have three
4. Violates applying technological controls. The use of the check protector
5. Violates segregation of duties. It is good internal control to separate
duties for cash receipts and cash disbursements. Moreover, an
Problem 6-2B (20 minutes)
Part 1
Jan. 3
Petty Cash ....................................................................
150.00
Cash ........................................................................
150.00
To establish the petty cash fund.
Jan. 14
Office Supplies Expense .............................................
14.29
Jan. 15
Petty Cash ....................................................................
50.00
Cash ........................................................................
50.00
Cash ........................................................................
182.65
To reimburse the petty cash fund.**
Part 2
If the January 31 reimbursement is not made and no entry is recorded, then
Problem 6-3B (30 minutes)
Part 1
Part 2
Blues Music Center
Petty Cash Payments Report (for March)
Delivery expense
Mar. 11
Delivery of customer's merchandise ..........................
$ 10.75
Mileage expense
Mar. 30
Reimbursement for mileage ................................
56.80
Postage expense
Mar. 28
Paid postage ................................................................
18.00
Part 3
Mar. 31
Delivery Expense .........................................................
10.75
Mileage Expense ..........................................................
56.80
Postage Expense .........................................................
18.00
Problem 6-4B (30 minutes)
Part 1
SEVERINO CO.
Bank Reconciliation
December 31, 2015
Bank statement balance ........
$46,822.40
Book balance ................................
$32,878.30
Deduct
Deduct
Checks No. 1242 .... $ 410.40
NSF check ......... $ 762.50
Part 2
Dec. 31
Cash ...............................................................................
9.00
Office Supplies .......................................................
9.00
To correct an entry error.
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
Problem 6-5B (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
Deduct
Deduct
Checks No. 1780 .. $1,425.90
NSF check .... $431.80
Part 2
May 31
Cash ..............................................................................
7,350.00
Collection Expense .....................................................
50.00
Notes Receivable ...................................................
7,400.00
To record note collection less fee.

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