PROBLEM 7-6B
(a) GAMEL COMPANY
Bank Reconciliation
October 31, 2015
Cash balance per bank statement ……………………………… $15,313.00
Less: Outstanding checks
No.
Amount
No.
Amount
62
183
284
$107.74
127.50
215.26
862
863
864
$132.10
192.78
140.49
……………….
915.87
Adjusted cash balance per bank ……………………………….. $17,623.31
Cash balance per books……………………………………………. $18,608.81
Add: Bank credit (collection of note receivable) ……….. 460.00
Adjusted balance per books (before theft) …………………. 19,068.81
Less: Theft ……………………………………………………………… 1,445.50*
Adjusted cash balance per books ……………………………… $17,623.31
*$19,068.81 – $17,623.31
(b) The cashier attempted to cover the theft of $1,445.50 by:
PROBLEM 7-6B (Continued)
(c) 1. The principle of independent internal verification has been violated
2. The principle of segregation of duties has been violated because
COMPREHENSIVE PROBLEM SOLUTION
(a)
Dec. 7
Cash …………………………………………………….
Accounts Receivable ……………………..
3,600
3,600
12
Inventory ……………………………………………...
Accounts Payable ………………………….
12,000
12,000
17
Accounts Receivable …………………………..
Sales Revenue ……………………………….
Cost of Goods Sold ……………………………...
Inventory ……………………………………….
16,000
10,000
16,000
10,000
19
Salaries and Wages Expense ………………...
Cash ……………………………………………..
2,200
2,200
22
Accounts Payable ………………………………...
Cash ($12,000 X .99) ……………………….
Inventory ……………………………………….
12,000
11,880
120
26
Cash ($16,000 X .98) ……………………………..
Sales Discounts …………………………………...
Accounts Receivable ……………………..
15,680
320
16,000
31
Cash …………………………………………………….
Accounts Receivable ……………………..
2,700
2,700
COMPREHENSIVE PROBLEM SOLUTION (Continued)
(b) & (e) General Ledger
Cash
12/1 Bal. 18,200
12/7 3,600
12/26 15,680
12/31 Bal. – 0 –
12/31 680
12/1 Bal. 16,000
12/12 12,000
12/17 10,000
12/22 120
12/31 Bal. 17,880
Prepaid Insurance
12/31 Bal. 1,200
12/26 320
12/31 Bal. 10,000
12/19 2,200
12/22 11,880
12/31 680
Accounts Payable
12/22 12,000
12/1 Bal. 6,100
12/12 12,000
12/31 Bal. 6,100
12/19 2,200
COMPREHENSIVE PROBLEM SOLUTION (Continued)
(c) FULLERTON COMPANY
Bank Reconciliation
December 31, 2015
Cash balance per bank statement …………………….. $26,130
Add: Deposits in transit …………………………………… 2,700
28,830
(d) Dec. 31 Cash …………………………………………………. 2,200
31 Accounts Receivable …………………………. 680
31 Depreciation Expense ………………………… 200
Accumulated Depreciation—
31 Insurance Expense …………………………….. 400
COMPREHENSIVE PROBLEM SOLUTION (Continued)
(f) FULLERTON COMPANY
Adjusted Trial Balance
December 31, 2015
DR.
CR.
Cash …………………………………………………….
$27,620
Accounts Receivable …………………………….
1,880
Inventory ………………………………………………
17,880
Prepaid Insurance …………………………………
1,200
Equipment…………………………………………….
28,000
Accumulated Depreciation—Equipment …
$ 3,200
Accounts Payable …………………………………
6,100
Common Stock ……………………………………..
50,000
Retained Earnings …………………………………
14,400
Sales Revenue ………………………………………
16,000
Sales Discounts ……………………………………
320
Cost of Goods Sold ……………………………….
10,000
Depreciation Expense …………………………...
200
Salaries and Wages Expense …………………
2,200
Insurance Expense ………………………………..
400
$89,700
$89,700
(g) FULLERTON COMPANY
Income Statement
For the Month Ending December 31, 2015
Sales revenue ……………………………………….
$16,000
Less: Sales discounts ………………………….
320
Net sales ………………………………………………
15,680
Cost of goods sold ………………………………..
10,000
Gross profit ………………………………………….
5,680
Operating expenses
Salaries and wages expense …………..
$2,200
Insurance expense …………………………
400
Depreciation expense ……………………..
200
2,800
Net income……………………………………………
$ 2,880
COMPREHENSIVE PROBLEM SOLUTION (Continued)
(g) FULLERTON COMPANY
Balance Sheet
December 31, 2015
Assets
Current assets
Cash ……………………………………………….
$27,620
Accounts receivable …………………………
1,880
Inventory …………………………………………
17,880
Prepaid insurance …………………………...
1,200
Total current assets ……………………..
$48,580
Property, plant, and equipment
Equipment ……………………………………….
28,000
Less: Accumulated
depreciation—Equipment ……….
3,200
24,800
Total assets ……………………………………………
$73,380
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable …………………………….
$ 6,100
Stockholders’ equity
Common stock ………………………………..
$50,000
Retained earnings ($14,400 + $2,880) ..
17,280
67,280
Total liabilities and stockholders’ equity ….
$73,380
BYP 7-1 FINANCIAL REPORTING PROBLEM
the United States of America.”
(b) Cash and cash equivalents are reported at $9,815 million for 2011 and
$11,261 million for 2010.
(d) The Company’s management is responsible for establishing and
maintaining adequate internal control over financial reporting (as
defined in Rule 13a–15(f) under the Exchange Act). Management
Report on Form 10–K.
BYP 7-2 COMPARATIVE ANALYSIS PROBLEM
PepsiCo
Coca-Cola
(a)
(1)
$4,067 million
$12,803 million
(2)
$1,876 million decrease
$4,286 million increase
(3)
$8,944 million
$9,474 million
amounts of cash.
BYP 7-3 COMPARATIVE ANALYSIS PROBLEM
Amazon
Wal-Mart
(a)
(1)
$5,269 million
$6,550 million
(2)
$1,492 million increase
$845 million decrease
(3)
$3,903 million
$24,255 million
cash balances at the end of 2011 and are capable of generating huge
amounts of cash.