Instructions

• Students are to complete the exercises in Word (or some other compatible word processor) and submit using the button at the bottom of the page.
• If you have any technical issues please contact Technical Support immediately by clicking on the AskYU icon in the top right of any screen on the campus.

Question 1

Define internal control. Who is responsible for establishing an effective system of internal control? What are two major constraints of any system of internal control?

Question 2

John Snows chequebook lists the following:

Date	Cheque #	Item	Cheque	Deposit	Balance
Nov	1					$705
	4	622	Direct Energy	$19		686
	9		Dividends		$116	802
	13	623	Canadian Tire	43		759
	14	624	Petro-Canada	58		701
	18	625	Cash	50		651
	26	626	Faith of the Seven Church	25		626
	28	627	Beyond the Wall Apartments	275		351
	30		Paycheque		846	1,197

The November bank statement shows:

Balance	$705
Add deposits	116
Deduct cheques	No. 622 623 624 625 Amount $19 43 85 50
Other charges:
NSF cheque	$8
Service charge	12
Balance	$604

Prepare John Snows bank reconciliation at November 30^th

Question 3

Digital Solutions Inc. is preparing its cash budget for 2016. Digital ended 2015 with cash of $81 million and managers need to keep a cash balance of at least $75 million for operations.

Collections from customers are expected to total $11,284 million during 2016 and payments for the cost of services and products should reach $6,166 million. Operating expense payments are budgeted at $2,543.

During 2016, Digital expects to invest $1,825 million in new equipment and sell older assets for $115 million. Debt payments scheduled for 2016 will total $597 million. The company forecasts net income of $890 million for 2016 and plans to pay dividends of $338.

Prepare Digital Solutions cash budget for 2016. Will the budgeted level of cash receipts leave Digital with the desired ending cash balance of $75 million, or will the company need additional financing? If it does, how much will it need? Please prepare a cash budget.

Question 4

The October 31 bank statement of Spooky Halloween Costumes Ltd. (SHC) has just arrived from TD Bank. To prepare the SHC bank reconciliation, you gather the following data:

• SHCs Cash account shows a balance of $2,256.14 on October 31.
• The October 31 bank balance is $4,023.05.
• The bank statement shows that SHC earned $38.19 of interest on its bank balance during October. This amount was added to SHCs bank balance.
• SHC pays utilities of $250 and insurance of $100 by EFT.
• The following SHC cheques did not clear the bank by October 31:

  Cheque #	Amount
  237	$46.10
  288	141.00
  291	578.05
  293	11.87
  294	609.51
  295	8.88
  296	101.63

• The bank statement includes a donation of $850, electronically deposited to the bank for SHC.
• The bank statement lists a $10.50 bank service charge.
• On October 31, the SHC treasurer deposited $16.15, which will appear on the November bank statement.
• The bank statement includes a $300 deposit that SHC did not make. The bank added $300 to SHCs account for another companys deposit.
• The bank statement includes two charges for returned cheques from donors. One is a $395 cheque received from a donor with the imprint Unauthorized Signature. The other is a nonsufficient funds cheque in the amount of $146.67 received from a client.

Prepare the bank reconciliation for SHC.

Journalize the October 31 transactions needed to update SHCs Cash account. You do not need to include an explanation for each entry.

Evaluation

Financial Accounting focuses heavily on finding solutions to numerical problems. With that in mind, most units will include a number of problems. For each problem, you will need to provide more than a simple numerical response. Your solutions should thoroughly address the issue and present the findings in a meaningful format similar to those developed within the chapters and as part of the review exercises solutions. Part value may be assigned for incorrect responses providing evidence of understanding of the principles exist.

Submission status

Submission status	No attempt
Grading status	Not graded
Due date	Saturday, 21 January 2017, 10:00 PM
Time remaining	3 days 22 hours