Chpt 4 Hw Pt 2 Spring 2023

Bourne Incorporated reports a cash balance at the end of the month of $2,145. A comparison of the company's cash records with the monthly bank statement reveals several additional cash transactions: bank service fees ($66), an NSF check from a customer ($160), a debit card used for the purchase of supplies ($200), and a customers note receivable collected by the bank ($1,000) plus interest earned ($16). Record the necessary entries to adjust the balance of cash.

1. Cash (debit) $1,016 Notes Receivable (credit) $1,000 Interest Revenue (credit) $16 2. Service Fee Expense (debit) $66 Accounts Receivable (debit) $160 Supplies (debit) $200

Below are several statements about occupational fraud. Select whether the answer to each of the statements is true or false. 1. For most large companies, occupational fraud is minimal and internal control procedures are unnecessary. 2. Managers have a variety of reasons for manipulating the numbers in financial statements, such as maximizing their compensation, increasing the company's stock price, and preserving their jobs. 3. Internal control procedures include formal policies and procedures related to (1) safeguarding the company's assets and (2) improving the accuracy and reliability of accounting information. 4. "Cooking the books" is a phrase used by accountants to indicate the preparation of financial statements that are free of manipulation. 5. Most occupational fraud cases involve misuse of the company's resources. 6. Common types of financial statement fraud include creating fictitious revenues from a fake customer, improperly valuing assets, hiding liabilities, and mismatching revenues and expenses.

1. False 2. True 3. True 4. False 5. True 6. True

Below are several scenarios related to control activities of a company. For each scenario, determine which control activity is violated. Control activities include separation of duties, physical controls, proper authorization, employee management, reconciliations, and performance reviews. If no control is violated, select "none." 1. A manufacturing company compares total sales in the current year to those in the previous year but does not compare the cost of production. 2. So that employees can have easy access to office supplies, a company keeps supplies in unblocked cabinets in multiple locations. 3. At the end of each day, a single employee collects all cash received from customers, records the total, and makes the deposit at the bank. 4. At the end of the year only, the company compares its cash records to the bank's records of cash deposited and withdrawn during the year. 5. A company encourages employees to call an anonymous hotline if they believe other employees are circumventing internal control features. 6. All employees have the authority to refund a customer's money.

1. Performance reviews 2. Physical controls 3. Separation of duties 4. Reconciliation 5. None 6. Proper authorization

Halle's Berry Farm established a $400 petty cash fund on September 4 to pay for minor cash expenditures. The fund is replenished at the end of the each month. At the end of September, the fund contains $313 in cash. The company has also issued a credit card and authorized its office manager to make purchases. Expenditures for the month include the following items: Entertainment for office party (petty cash) $87 Repairs and maintenance (credit card) $117 Postage (credit card) $72 Delivery cost (credit card) $82 1. Record the establishments of the petty cash fund on September 4. 2. Record credit card expenditures during the month. The credit card balance is not yet paid. 3. Record petty cash expenditures during the month.

1. September 4 Petty Cash $400 (debit Cash $400 (credit) 2. September 30 Repairs and Maintenance Expense $117 (debit) Postage Expense $72 (debit) Delivery Expense $82 (debit) Account Payable $271 (credit) 3. September 30 Entertainment Expense $87 (debit) Cash $87 (credit)

Select the appropriate term associated with a bank reconciliation for each of the following descriptions. A. Cash receipts received by the company but not yet recorded by the bank. B. Fees imposed by the bank to the company for providing routine services. C. Checks written to the company that are returned by the bank as not having adequate funds. D. Checks written by the company but not yet recorded by the bank. E. Amount collected by the bank on behalf of the company in a lending arrangement. F. The company recorded a deposit twice.

A. Deposits outstanding B. Bank service fees C. NSF checks from customers D. Checks outstanding E. Note collected F. Company error

Damon Company receives its monthly bank statement, which reports a balance of $1,675. After comparing this to the company's cash records, Damon's accountants determine that deposits outstanding total $2,900 and checks outstanding total $3,150. Calculate the reconciled bank balance for cash.

Bank balance: $1,675 Deposits outstanding: $2,900 Checks outstanding: ($3,150) Reconciled bank balance: $1,425

Bourne Incorporated reports a cash balance at the end of the month of $2,395. A comparison of the company's cash records with the monthly bank statement reveals several additional cash transactions: bank services fees ($76), an NSF check from a customer ($260), a debit card used for the purchase of supplies ($110), and a customer's note receivable collected by the bank ($1,000) plus interest earned ($26). Calculate the reconciled company balance for cash.

Company balance: $2,395 Services fees: -($76) NSF check from customers -($260) Debit card to purchase supplies -($110) Note received +$1,000 Interest earned +$26 Reconciled company balance: $2,975

Bank statement increase cash balance with a ______ and decrease with a ______.

Credit, debit

Below are several amounts reported at the end of the year. Currency located at the company $850 Supplies $2,400 Short-term investments that mature within three months $1,750 Accounts receivable $2,700 Balance in savings account $7,700 Checks received from customers but not yet deposited $450 Prepaid rent $1,250 Coins located at the company $120 Equipment $8,600 Balance in checking account $5,400 Calculate the amount of cash to report in the balance sheet.

Currently located at the company $850 Supplies (will be reported under current assets) Short-term investment that mature within three months $1,750 (cash equivalents) Accounts receivable (will be reported under current assets) Balance in savings account $7,700 Checks receiving from customers but not yet deposited $450 Prepaid rent (will be reported u der current assets) Coins located at the company $120 Equipment (will be reported as a long-term asset) Balance in checking account $5,400 Total cash $16,270

During the year, the following sales transactions occur. There is a charge of 3% on all credit card transactions and a 1% change on all debit card transactions. 1. Total cash sales = $380,000 2. Total check sales = $230,000 3. Total credit card sales = $480,000 4. Total debit card sales = $210,000 Calculate the amount recorded as cash receipts from these transactions. (when your business receives cash from an external source, such as a customer, investor, or bank)

Total cash sales = $380,000 Total check sales = $230,000 Total credit card sales = $465,600 Total debit card sales = $207,900 Total cash receipts = $1,283,500

For each company, calculate the ratio of cash to Noncash assets. Tuohy Incorporated Cash: 4,600 Total assets: $24,200 Total Liabilities: $4,000 Other Corporations Cash: $3,900 Total assets: $26,500 Total liabilities: $6,600

Tuohy Incorporated Cash: $4,600 / Noncash $19,600 (24,200-4,600) = Ratio: 23.47% (4,600/19,600 x 100 = 23.47) Other Corporation Cash: $3,900 / Noncash: $22,600 (26,500-3,900) = Ratio: 17.26% (3,900/22,600 x 100 = 17.26)

Select the appropriate components of internal controls for each of the following descriptions. a. Procedures for maintaining separation of duties. b. Routine activities that are meant to continually observe internal control activities. c. Transfer of data from lower makers to top executives for accurate financial reporting. d. Formal policies to evaluate internal and external threats to achieving company objectives. e. Overall attitude of the company with respect to internal controls.

a. Control activities b. Monitoring c. Information and communication d. Risk assessment e. Control environment

Select the appropriate provisions of the Sarbanes-Oxley Act (SOX) for each of the following descriptions. a. Executives must personally certify the company's financial statements. b. Audit firm cannot provide a variety of the other services to its client, such as investment advising. c. PCAOB established standards related to the preparation of audited financial reports. d. Lead audit partners are required to change every five years. e. Management must document the effectiveness of procedures that could affect financial reporting.

a. Corporate executives accountability b. Nonaduit services c. Oversight board d. Auditor rotation e. Internal control

Select the appropriate type of cash flow for each of the following definitions. a. Cash flows related to long-term assets and investment securities. b. Cash flows related to long-term liabilities and stockholders' equity. c. Cash flows related to revenues and expenses.

a. Investing cash flows b. Financing cash flows c. Operating cash flows

checks outstanding

checks the company has written that have not been subtracted from the bank's record of the company's balance