Warda Trading LLC is a local merchandiser in Oman. From the given Trail balance for the...
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Warda Trading LLC is a local merchandiser in Oman. From the given Trail balance for the year ending 31.12.2019, prepare Income statement for the business. OMR OMR Sales /turnover 250,000 Purchases Buildings 106,250 50,000 Inventory at 1" Jan 2019 10,000 Cash at Bank 15,000 Trade Receivables 93,750 Trade Payables 62,500 Plant and equipment 125,000 Rent and rates 18,750 Sales discount 6,250 Selling expenses 5,000 Wages and salaries 40,000 Bad Debt on Trade receivable 6.250 Bank interest 2,500 Carriage inwards 3,750 Retained earnings as at 1 Jan 2019 32,500 Share Capital at 1 Jan 2019 125.000 10% Bank loan 25,000 Sales return 10,000 Carriage outwards 2,500 495,000 495.000 Cloud Company, a local distributor, has asked your accounting firm to evaluate their system of internal controls because they are planning to go public in the future. The Chairman wants to be aware of any new regulations required of his company if they go public, so he met with a colleague of yours at a local restaurant. The President of the company explained the current system of internal controls to your colleague. Your colleague has since been promoted to another position so he has passed on the information below so you can generate recommendations for the partner at your accounting firm to share with the Chairman of Cloud Company. Since Cloud Company is a relatively medium to large sized enterprise, they have a lot of confidence in their long-term staffs. They have one accountant who serves as Treasurer and Controller which streamlines many of their processes. In this dual role, he purchases all the supplies and pays for these purchases. He also receives the checks and completes the monthly bank reconciliation. The accountant is so busy that the company handies petty cash a bit differently. All staffs have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. The accountant has recently started using pre-numbered invoices and wants to buy an indelīble ink machine to print thecir checks. The Chairman is waiting for your hearing opinion if this is a necessary before he authorize the purchase. In evaluating the internal control over inventory for the Cloud Company, you learned that the warchouse receiving clerk is responsible for ordering parts for supply inventory used by Cloud Company, counts the inventory when received at the dock, records the receipts into the inventory ledger, and takes the annual inventory, No supervisor reviews the receiving clerk The Cloud Company has been using purchase cards (credit cards) for about a year. The Financial Director (FD) and Administrative Director (AD) cach have a purchase card that they ordered themselves. They also each set their own spending limits on their cards. They cach order goods and services. They are careful to follow the company's purchasing rules and use formal contracts whenever possible. The FD and AD each verify that their own goods and services were received and sign the packing slip or invoice. The FD authorizes payment on both purchase cards. The FD has known the AD since high school. Since he has known her for so long, he trusts her and takes her word that she has reconciled all receipts to her statement, He always authorizes and makes payment on her purchase card based on her word, especially since he knows that she keeps all documentation. You are required to analyze information given in above case study and suggest Internal control measures that Cloud Company implement to avoid any such weaknesses in future. Warda Trading LLC is a local merchandiser in Oman. From the given Trail balance for the year ending 31.12.2019, prepare Income statement for the business. OMR OMR Sales /turnover 250,000 Purchases Buildings 106,250 50,000 Inventory at 1" Jan 2019 10,000 Cash at Bank 15,000 Trade Receivables 93,750 Trade Payables 62,500 Plant and equipment 125,000 Rent and rates 18,750 Sales discount 6,250 Selling expenses 5,000 Wages and salaries 40,000 Bad Debt on Trade receivable 6.250 Bank interest 2,500 Carriage inwards 3,750 Retained earnings as at 1 Jan 2019 32,500 Share Capital at 1 Jan 2019 125.000 10% Bank loan 25,000 Sales return 10,000 Carriage outwards 2,500 495,000 495.000 Cloud Company, a local distributor, has asked your accounting firm to evaluate their system of internal controls because they are planning to go public in the future. The Chairman wants to be aware of any new regulations required of his company if they go public, so he met with a colleague of yours at a local restaurant. The President of the company explained the current system of internal controls to your colleague. Your colleague has since been promoted to another position so he has passed on the information below so you can generate recommendations for the partner at your accounting firm to share with the Chairman of Cloud Company. Since Cloud Company is a relatively medium to large sized enterprise, they have a lot of confidence in their long-term staffs. They have one accountant who serves as Treasurer and Controller which streamlines many of their processes. In this dual role, he purchases all the supplies and pays for these purchases. He also receives the checks and completes the monthly bank reconciliation. The accountant is so busy that the company handies petty cash a bit differently. All staffs have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. The accountant has recently started using pre-numbered invoices and wants to buy an indelīble ink machine to print thecir checks. The Chairman is waiting for your hearing opinion if this is a necessary before he authorize the purchase. In evaluating the internal control over inventory for the Cloud Company, you learned that the warchouse receiving clerk is responsible for ordering parts for supply inventory used by Cloud Company, counts the inventory when received at the dock, records the receipts into the inventory ledger, and takes the annual inventory, No supervisor reviews the receiving clerk The Cloud Company has been using purchase cards (credit cards) for about a year. The Financial Director (FD) and Administrative Director (AD) cach have a purchase card that they ordered themselves. They also each set their own spending limits on their cards. They cach order goods and services. They are careful to follow the company's purchasing rules and use formal contracts whenever possible. The FD and AD each verify that their own goods and services were received and sign the packing slip or invoice. The FD authorizes payment on both purchase cards. The FD has known the AD since high school. Since he has known her for so long, he trusts her and takes her word that she has reconciled all receipts to her statement, He always authorizes and makes payment on her purchase card based on her word, especially since he knows that she keeps all documentation. You are required to analyze information given in above case study and suggest Internal control measures that Cloud Company implement to avoid any such weaknesses in future.
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Date Solution Tack2 Preparation of Income stetement foem the 1 Page No given trial ... View the full answer
Related Book For
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson
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