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Accounting 23rd Edition Carl S. Warren - Solutions
=+EX 8-26 Cash to monthly cash expenses ratio Delta Air Lines is one of the major airlines in the United States and the world. It provides passenger and cargo services for over 200 domestic U.S. cities as well as 70 international cities. It operates a fleet of over 800 aircraft and is
=+Net cash flows from operating activities $(1,123)Cash, December 31, 2004 1,811
=+a. Determine the monthly cash expenses. Round to one decimal place.
=+b. Determine the ratio of cash to monthly expenses. Round to one decimal place.
=+c. Based on your analysis, do you believe that Delta will remain in business?
=+EX 8-27 Cash to monthly cash expenses ratio Acusphere, Inc., is a specialty pharmaceutical company that develops new drugs and improved formulations of existing drugs using its proprietary microparticle technology. Currently, the company has three products in development in the areas of
=+EX 8-28 Cash to monthly cash expenses ratio Problems Series A The following procedures were recently installed by The Louver Shop:
=+a. Each cashier is assigned a separate cash register drawer to which no other cashier has access.
=+b. At the end of a shift, each cashier counts the cash in his or her cash register, unlocks the cash register record, and compares the amount of cash with the amount on the record to determine cash shortages and overages.
=+c. Vouchers and all supporting documents are perforated with a PAID designation after being paid by the treasurer.
=+d. Disbursements are made from the petty cash fund only after a petty cash receipt has been completed and signed by the payee.
=+e. All sales are rung up on the cash register, and a receipt is given to the customer. All sales are recorded on a record locked inside the cash register.
=+f. Checks received through the mail are given daily to the accounts receivable clerk for recording collections on account and for depositing in the bank.g. The bank reconciliation is prepared by the accountant.
=+PR 8-1A Evaluate internal control of cash objs. 2, 3 2006 2005 2004 2003 Cash as of December 31* $ 59,750 $ 51,112 $ 45,180 $ 54,562 Net cash flows from operating activities (48,089) (30,683) (19,319) (15,507)*Includes cash equivalents and short-term investments.
=+1. Determine the monthly cash expenses for 2006, 2005, 2004, and 2003. Round to one decimal place.
=+2. Determine the ratio of cash to monthly expenses as of December 31, 2006, 2005, 2004, and 2003. Round to one decimal place.
=+3. Based on (1) and (2), comment on Acusphere’s ratio of cash to monthly operating expenses for 2006, 2005, 2004, and 2003.Chapter 8 Sarbanes-Oxley, Internal Control, and Cash 387 Hallihan Company completed the following selected transactions during June 2010:June 1. Established a petty cash
=+12. The cash sales for the day, according to the cash register records, totaled $13,115.The actual cash received from cash sales was $13,129.
=+30. Petty cash on hand was $38. Replenished the petty cash fund for the following disbursements, each evidenced by a petty cash receipt:June 2. Store supplies, $55.
=+10. Express charges on merchandise purchased,$80(Merchandise Inventory).
=+14. Office supplies, $35.15. Office supplies, $40.18. Postage stamps, $42 (Office Supplies).
=+20. Repair to fax, $100 (Miscellaneous Administrative Expense).
=+21. Repair to office door lock, $35 (Miscellaneous Administrative Expense).
=+22. Postage due on special delivery letter, $27 (Miscellaneous Administrative Expense).
=+28. Express charges on merchandise purchased,$40(Merchandise Inventory).
=+30. The cash sales for the day, according to the cash register records, totaled $16,850.The actual cash received from cash sales was $16,833.
=+30. Increased the petty cash fund by $125.Instructions Journalize the transactions.
=+PR 8-2A Transactions for petty cash, cash short and over objs. 3, 6 The cash account for Interactive Systems at February 28, 2010, indicated a balance of$7,635. The bank statement indicated a balance of $13,333 on February 28, 2010.Comparing the bank statement and the accompanying canceled checks
=+a. Checks outstanding totaled $4,118.
=+b. A deposit of $4,500, representing receipts of February 28, had been made too late to appear on the bank statement.
=+c. The bank had collected $5,200 on a note left for collection. The face of the note was$5,000.
=+d. A check for $290 returned with the statement had been incorrectly recorded by Interactive Systems as $920. The check was for the payment of an obligation to Busser Co. for the purchase of office supplies on account.
=+e. A check drawn for $415 had been incorrectly charged by the bank as $145.
=+f. Bank service charges for February amounted to $20.Instructions
=+1. Prepare a bank reconciliation.
=+2. Journalize the necessary entries. The accounts have not been closed.
=+PR 8-3A Bank reconciliation and entries obj. 5✔ 1. Adjusted balance: $13,445 The cash account for Fred’s Sports Co. on June 1, 2010, indicated a balance of $16,515.During June, the total cash deposited was $40,150, and checks written totaled $43,600.The bank statement indicated a balance of
=+a. Checks outstanding totaled $6,840.
=+b. A deposit of $4,275, representing receipts of June 30, had been made too late to appear on the bank statement.
=+PR 8-4A Bank reconciliation and entries obj. 5✔ 1. Adjusted balance: $15,430 Instructions
=+Indicate whether each of the procedures of internal control over cash represents (1) a strength or (2) a weakness. For each weakness, indicate why it exists.
=+Rocky Mountain Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of July 31 have been taken from various documents and records and are reproduced as follows. The sources of the data are
=+BANK RECONCILIATION FOR PRECEDING MONTH (DATED JUNE 30):Cash balance according to bank statement. . . . . . . . . . . . . . . . . . . . . . . . $ 9,422.80 Add deposit of June 30, not recorded by bank . . . . . . . . . . . . . . . . . . . . . 780.80 __________$10,203.60 Deduct outstanding
=+CASH ACCOUNT:Balance as of July 1 $9,578.00 CHECKS WRITTEN:Number and amount of each check issued in July:Check No. Amount Check No. Amount Check No. Amount 614 $243.50 621 $309.50 628 $ 837.70 615 350.10 622 Void 629 329.90 616 279.90 623 Void 630 882.80 617 395.50 624 707.01 631 1,081.56 618
=+PR 8-5A Bank reconciliation and entries obj. 5✔ 1. Adjusted balance: $11,178.59c. A check for $640 had been incorrectly charged by the bank as $460.
=+d. A check for $80 returned with the statement had been recorded by Fred’s Sports
=+Co. as $800. The check was for the payment of an obligation to Miliski Co. on account.
=+e. The bank had collected for Fred’s Sports Co. $3,240 on a note left for collection. The face of the note was $3,000.
=+f. Bank service charges for June amounted to $35.
=+g. A check for $1,560 from ChimTech Co. was returned by the bank because of insufficient funds.Instructions
=+1. Prepare a bank reconciliation as of June 30.
=+2. Journalize the necessary entries. The accounts have not been closed.
=+Date and amount of each deposit in July:Date Amount Date Amount Date Amount July 2 $569.50 July 12 $508.70 July 23 $731.45 5 701.80 16 600.10 26 601.50 9 819.24 19 701.26 31 925.05 Instructions 1. Prepare a bank reconciliation as of July 31. If errors in recording deposits or checks are
=+2. Journalize the necessary entries. The accounts have not been closed.
=+3. What is the amount of Cash that should appear on the balance sheet as of July 31?
=+4. Assume that a canceled check for $125 has been incorrectly recorded by the
=+bank as $1,250. Briefly explain how the error would be included in a bank reconciliation and how it should be corrected.PAGE 1 AMERICAN NATIONAL BANK OF DETROIT DETROIT, MI 48201-2500 (313)933-8547 MEMBER FDIC ACCOUNT NUMBER FROM 7/01/20– TO 7/31/20–BALANCE 9,422.80 DEPOSITS 6,086.35
=+9 20 4 ROCKY MOUNTAIN INTERIORS* – – – – – CHECKS AND OTHER DEBITS – – – – – * – DEPOSITS – * – DATE – * – BALANCE– *No.580 310.10 No.612 92.50 780.80 07/01 9,801.00 No.602 85.50 No.614 243.50 569.50 07/03 10,041.50 No.615 350.10 No.616 279.90 701.80 07/06
=+THE RECONCILEMENT OF THIS STATEMENT WITH YOUR RECORDS IS ESSENTIAL.ANY ERROR OR EXCEPTION SHOULD BE REPORTED IMMEDIATELY.390 Chapter 8 Sarbanes-Oxley, Internal Control, and Cash Problems Series B
=+The following procedures were recently installed by C&G Hydraulics Company:a. The bank reconciliation is prepared by the cashier, who works under the supervision of the treasurer.
=+b. All mail is opened by the mail clerk, who forwards all cash remittances to the cashier.The cashier prepares a listing of the cash receipts and forwards a copy of the list to the accounts receivable clerk for recording in the accounts.
=+c. At the end of the day, cash register clerks are required to use their own funds to make up any cash shortages in their registers.
=+d. At the end of each day, all cash receipts are placed in the bank’s night depository.
=+e. At the end of each day, an accounting clerk compares the duplicate copy of the daily cash deposit slip with the deposit receipt obtained from the bank.
=+f. The accounts payable clerk prepares a voucher for each disbursement. The voucher along with the supporting documentation is forwarded to the treasurer’s office for approval.
=+g. After necessary approvals have been obtained for the payment of a voucher, the treasurer signs and mails the check. The treasurer then stamps the voucher and supporting documentation as paid and returns the voucher and supporting documentation to the accounts payable clerk for filing.
=+h. Along with petty cash expense receipts for postage, office supplies, etc., several postdated employee checks are in the petty cash fund.Instructions Indicate whether each of the procedures of internal control over cash represents
=+(1) a strength or (2) a weakness. For each weakness, indicate why it exists.
=+PR 8-1B Evaluating internal control of cash objs. 2, 3 Padilla’s Restoration Company completed the following selected transactions during March 2010:Mar. 1. Established a petty cash fund of $800.
=+10. The cash sales for the day, according to the cash register records, totaled $11,368.The actual cash received from cash sales was $11,375.
=+31. Petty cash on hand was $193. Replenished the petty cash fund for the following disbursements, each evidenced by a petty cash receipt:Mar. 3. Store supplies, $275.
=+7. Express charges on merchandise sold, $120 (Delivery Expense).9. Office supplies, $18.13. Office supplies, $13.19. Postage stamps, $9 (Office Supplies).
=+21. Repair to office file cabinet lock, $40 (Miscellaneous Administrative Expense).
=+22. Postage due on special delivery letter, $18 (Miscellaneous Administrative Expense).
=+24. Express charges on merchandise sold, $90 (Delivery Expense).30. Office supplies, $16.
=+31. The cash sales for the day, according to the cash register records, totaled$14, 690. The actual cash received from cash sales was $14,675.
=+31. Decreased the petty cash fund by $50.Instructions Journalize the transactions.
=+PR 8-2B Transactions for petty cash, cash short and over objs. 3, 6 Chapter 8 Sarbanes-Oxley, Internal Control, and Cash 391 The cash account for Discount Medical Co. at April 30, 2010, indicated a balance of$4,604. The bank statement indicated a balance of $9,158 on April 30, 2010. Comparing the
=+a. Checks outstanding totaled $5,225.
=+b. A deposit of $3,150, representing receipts of April 30, had been made too late to appear on the bank statement.
=+c. The bank had collected $4,120 on a note left for collection. The face of the note was$4,000.
=+d. A check for $2,490 returned with the statement had been incorrectly recorded by
=+Discount Medical Co. as $2,409. The check was for the payment of an obligation to Goldstein Co. for the purchase of office equipment on account.
=+e. A check drawn for $170 had been erroneously charged by the bank as $1,700.
=+f. Bank service charges for April amounted to $30.Instructions 1. Prepare a bank reconciliation.
=+2. Journalize the necessary entries. The accounts have not been closed.
=+PR 8-3B Bank reconciliation and entries obj. 5✔ 1. Adjusted balance: $8,613 The cash account for Inky’s Bike Co. at July 1, 2010, indicated a balance of $12,470.During July, the total cash deposited was $26,680, and checks written totaled $31,500.The bank statement indicated a balance of
=+a. Checks outstanding totaled $12,850.
=+b. A deposit of $5,100, representing receipts of July 31, had been made too late to appear on the bank statement.
=+c. The bank had collected for Inky’s Bike Co. $2,675 on a note left for collection. The face of the note was $2,500.
=+d. A check for $370 returned with the statement had been incorrectly charged by the bank as $730.
=+e. A check for $320 returned with the statement had been recorded by Inky’s Bike Co.as $230. The check was for the payment of an obligation to Ranchwood Co. on account.
=+f. Bank service charges for July amounted to $25.
=+g. A check for $850 from Hallock Co. was returned by the bank because of insufficient funds.Instructions 1. Prepare a bank reconciliation as of July 31.
=+2. Journalize the necessary entries. The accounts have not been closed.
=+PR 8-4B Bank reconciliation and entries obj. 5✔ 1. Adjusted balance: $9,360 Reydell Furniture Company deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of June 30 have been taken from various
=+PR 8-5B Bank reconciliation and entries obj. 5✔ 1. Adjusted balance: $13,893.32 Balance as of June 1 $9,317.40 CASH RECEIPTS FOR MONTH OF JUNE $9,601.58 DUPLICATE DEPOSIT TICKETS:Date and amount of each deposit in June:Date Amount Date Amount Date Amount June 1 $1,080.50 June 10 $ 896.61 June
=+CHECKS WRITTEN:Number and amount of each check issued in June:Check No. Amount Check No. Amount Check No. Amount 740 $237.50 747 Void 754 $ 449.75 741 495.15 748 $ 450.90 755 272.75 742 501.90 749 640.13 756 113.95 743 671.30 750 276.77 757 407.95 744 506.88 751 299.37 758 259.60 745 117.25 752
=+PAGE 1 AMERICAN NATIONAL BANK OF DETROIT DETROIT, MI 48201-2500 (313)933-8547 MEMBER FDIC ACCOUNT NUMBER FROM 6/01/20– TO 6/30/20–BALANCE 9,447.20 DEPOSITS 8,691.77 WITHDRAWALS 8,014.37 OTHER DEBITS AND CREDITS 3,370.00CR NEW BALANCE 13,494.60 9
=+20 4 REYDELL FURNITURE COMPANY* – – – CHECKS AND OTHER DEBITS – – – * – – DEPOSITS – – * – DATE – * – – BALANCE– – *No.731 162.15 No.736 345.95 690.25 6/01 9,629.35 No.739 60.55 No.740 237.50 1,080.50 6/02 10,411.80 No.741 495.15 No.742 501.90 854.17 6/04 10,268.92
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