Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
CHAPTER 8
SOLUTIONS TO PROBLEMS: SET B
PROBLEM 8-1B
(a)
Principles
Application to Granada Theater
Establishment of responsibility.
Only cashiers are authorized to sell
tickets. Only the manager and cashier
can handle cash.
Physical controls.
A safe is used for the storage of cash
and a machine is used to issue tickets.
(b) Actions by the usher and cashier to misappropriate cash might include:
(1) Instead of tearing the tickets, the usher could return the tickets to
the cashier who could resell them, and the two could divide the cash.
PROBLEM 8-2B
(a) July 1 Petty Cash ................................................ 100.00
Cash................................................... 100.00
15 Freight-Out ............................................... 51.00
Postage Expense ..................................... 20.50
Aug. 15 Freight-Out ............................................... 40.20
Entertainment Expense ........................... 21.00
Postage Expense ..................................... 16.00
Miscellaneous Expense ........................... 19.80
(b)
Petty Cash
Date
Explanation
Ref.
Debit
Credit
Balance
July 1
CP
100
100
PROBLEM 8-2B (Continued)
(c) The internal control features of a petty cash fund include:
(1) A custodian is responsible for the fund.
PROBLEM 8-3B
(a) DAVANEY GENETICS COMPANY
Bank Reconciliation
May 31, 2017
Cash balance per bank statement ..................... $13,332
Add: Deposit in transit ..................................... $2,600
Bank error—Morray check ...................... 900 3,500
16,832
Less: Outstanding checks ................................ 1,225
Adjusted cash balance per bank ....................... $15,607
(b) May 31 Cash ................................................................ 4,555
Miscellaneous Expense ................................. 25
Notes Receivable .................................... 4,500
Interest Revenue .................................... 80
PROBLEM 8-4B
(a) PHILLIPS COMPANY
Bank Reconciliation
November 30, 2017
Cash balance per bank statement ................. $ 9,100
Add: Deposits in transit ............................... 2,541
11,641
Less: Outstanding checks
No. 2451 ............................................ $700
No. 2472 ............................................ 270
No. 2478 ............................................ 300
Cash balance per books................................. $ 5,958
Add: Note collected by bank
($2,300 note plus $91 interest
Less: Check printing charge ......................... $ 34
Error in recording check No. 2479 ....... 90*
Error in 11-21 deposit
PROBLEM 8-4B (Continued)
(b) Nov. 30 Cash .......................................................... 2,375
Miscellaneous Expense ........................... 16
Notes Receivable .............................. 2,300
Interest Revenue ............................... 91
PROBLEM 8-5B
(a) ZHANG COMPANY
Bank Reconciliation
August 31, 2017
Cash balance per bank statement ....................... $16,856
Add: Deposits in transit (1) ................................ $ 5,729
Bank error ($277 – $275) ........................... 2 5,731
(1) August receipts per books ........................... $50,050
August deposits per bank ............................ $47,521
(2) Disbursements per books in
August...................................... $47,794
Less: Book error ........................ 90
Total disbursements to be
PROBLEM 8-5B (Continued)
(b) Aug. 31 Cash .............................................................. 5,105
Notes Receivable .................................. 5,000
Interest Revenue ................................... 105
PROBLEM 8-6B
(a) GAMEL COMPANY
Bank Reconciliation
October 31, 2017
Cash balance per bank statement .................................... $15,313.00
Plus: Undeposited receipts ............................................. 3,226.18
18,539.18
Less: Outstanding checks
No.
Amount
No.
Amount
62
$107.74
862
$132.10
Cash balance per books.................................................... $18,608.81
Add: Bank credit (collection of note receivable) ........... 460.00
(b) The cashier attempted to cover the theft of $1,445.50 by:
1. Not listing as outstanding three checks totaling $450.50 (No. 62,
$107.74; No. 183, $127.50; and No. 284, $215.26).
PROBLEM 8-6B (Continued)
(c) 1. The principle of independent internal verification has been violated
because the cashier prepared the bank reconciliation.
