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.
cashier and to the usher. The manager
company accountant records the cash.
Documentation procedures.
Tickets are prenumbered. Cash count
sheets are prepared. Deposit slips are
prepared.
Physical controls.
A safe is used for the storage of cash
and a machine is used to issue tickets.
the end of each cashier’s shift. Daily
comparisons are made by the company
treasurer.
Human resource controls.
(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.