Acc 557 Week 5 Chapter 7 (E7-5,e7-7,e7-14,p7-3A)

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ACC 557 Week 5 Chapter 7 (E7-5,E7-7,E7-14,P7-3A)

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<b>E7-5</b>Listed below are five procedures followed by Parson Company.1.Several individuals operate the cash register using the same register drawer.2.A monthly bank reconciliation is prepared by someone who has no other cash responsibilities.3.Fran Vorbeck writes checks and also records cash payment journal entries.4.One individual orders inventory, while a different individual authorizes payments.5.Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording.Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated.<b>Exercise 7-7</b>LaSalle Company established a petty cash fund on May 1, cashing a check for $100. The company reimbursed the fund on June 1 and July 1 with the following results.June 1: Cash in fund $1.75.Receipts: delivery expense $31.25; postage expense $41; and miscellaneous expense $25.July 1: Cash in fund $3.25.Receipts: delivery expense $21; entertainment expense $51; and miscellaneous expense $24.75.On July 10, LaSalle increased the fund from $100 to $150.00.Prepare journal entries for LaSalle Company. <b><i>(Credit account titles are automatically indented when amount is entered. Do not indent manually.)</i></b><b>E7-14</b>Nayak Company has recorded the following items in its financial recordsProblem 7-3AOn May 31, 2014, Terrell Company had a cash balance per books of $6,781.50. The bank statement from Home Town State Bank on that date showed a balance of $6,804.60. A comparison of the statement with the cash account revealed the following facts.1.The statement included a debit memo of $40 for the printing of additional company checks.2.Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Terrell Company for the correct amount.3.Outstanding checks at May 31 totaled $276.25. Deposits in transit were $1,916.15.4.On May 18, the company issued check No. 1181 for $685 to Barry Dietz on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Terrell Company for $658.5.A $3,000 note receivable was collected by the bank for Terrell Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.6.Included with the cancelled checks was a check issued by Bridges Company to Jon Newton for $600 that was incorrectly charged to Terrell Company by the bank.7.On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sandy Grifton, a customer, to Terrell Company on account.<b>(a)</b> Prepare the bank reconciliation at May 31, 2014. <b><i>(Reconcile the bank balance first and then the book balance.)</i></b><b>(b)</b> Prepare the necessary adjusting entries for Terrell Company at May 31, 2014. <b><i>(Credit account titles are automatically indented when amount is entered. </i></b><b><i>Do not indent manually.)</i></b>
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<b>E7-5</b>Listed below are five procedures followed by Parson Company.1.Several individuals operate the cash register using the same register drawer.2.A monthly bank reconciliation is prepared by someone who has no other cash responsibilities.3.Fran Vorbeck writes checks and also records cash payment journal entries.4.One individual orders inventory, while a different individual authorizes payments.5.Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording.Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated.<b>Exercise 7-7</b>LaSalle Company established a petty cash fund on May 1, cashing a check for $100. The company reimbursed the fund on June 1 and July 1 with the following results.June 1: Cash in fund $1.75.Receipts: delivery expense $31.25; postage expense $41; and miscellaneous expense $25.July 1: Cash in fund $3.25.Receipts: delivery expense $21; entertainment expense $51; and miscellaneous expense $24.75.On July 10, LaSalle increased the fund from $100 to $150.00.Prepare journal entries for LaSalle Company. <b><i>(Credit account titles are automatically indented when amount is entered. Do not indent manually.)</i></b><b>E7-14</b>Nayak Company has recorded the following items in its financial recordsProblem 7-3AOn May 31, 2014, Terrell Company had a cash balance per books of $6,781.50. The bank statement from Home Town State Bank on that date showed a balance of $6,804.60. A comparison of the statement with the cash account revealed the following facts.1.The statement included a debit memo of $40 for the printing of additional company checks.2.Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Terrell Company for the correct amount.3.Outstanding checks at May 31 totaled $276.25. Deposits in transit were $1,916.15.4.On May 18, the company issued check No. 1181 for $685 to Barry Dietz on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Terrell Company for $658.5.A $3,000 note receivable was collected by the bank for Terrell Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.6.Included with the cancelled checks was a check issued by Bridges Company to Jon Newton for $600 that was incorrectly charged to Terrell Company by the bank.7.On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sandy Grifton, a customer, to Terrell Company on account.<b>(a)</b> Prepare the bank reconciliation at May 31, 2014. <b><i>(Reconcile the bank balance first and then the book balance.)</i></b><b>(b)</b> Prepare the necessary adjusting entries for Terrell Company at May 31, 2014. <b><i>(Credit account titles are automatically indented when amount is entered. </i></b><b><i>Do not indent manually.)</i></b>
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