7-1 PROBLEMS $7,152.09. However, the financial department showed the balance of cash as $18 The Sapphire Co. received its June 30, bank statement which showed a cash balan An investigation of the cash account revealed the following: Interest income NSF check Outstanding checks Bank's service charge $28.09. $200.00 $125.07 $55.00 $619.03 Problem 7 The Lee Leg January 2, 1 A month es receipts: a $30.00, February Require 1) Pres 2) Pre 3) Su re 4) Sw 5) r Deposits in transit Required: 1) Prepare a bank reconciliation as of June 30, for this company. Problem 7-2 The following information was available for the Zaffran Associates cash account: Cash balance per bank Cash balance per book Outstanding checks: #105 #111 #120 NSF check Interest income Deposits in transit $10,071.93 $10,826.51 $75.07 $116.83 $87.93 $82.93 $35.17 $917.65 $69.00 Bank's service charge Required: 1) Reconcile the bank statement to the books. Be sure the bank reconciliation is in good form. 138 F Problem 7-3 The Lee Legal Services Firm established a petty cash account on January 2, in the amount of $250. A month end examination of the account revealed a balance of $10.50 and the following receipts: office supplies $59.18, postage expense $150.32 and miscellaneous expense $30.00. The account is to be replenished on February 1. Required: 1) Prepare the January 2, entry to establish the account. 2) Prepare the February 1 entry to replenish the fund. 3) Suppose the amount of cash remaining in the fund was $9.50, give the entry to replenish the fund. 4) Suppose the amount of cash remaining in the fund was $11.50, give the entry to replenish the fund. 5) Suppose the comptroller decided to increase the size of the fund to $300 on February 1. In one compound entry replenish, as well as, increase the fund using the original information. 6) Suppose the comptroller decided to decrease the fund to $200 on February 1. In one compound entry replenish, as well as, decrease the fund using the original information. Problem 7-4 The Burt Associates hired a new comptroller on Jan. 2. This comptroller believed in a lasse faire form of management and decided to relax the financial procedures and simply expect the financial employees to be trustworthy professionals. He decided to have the cashier make biweekly deposits of cash receipts and maintain adequate records of all receipts and deposits. The cashier is expected to give the records to the accountant once a month in time for month in processing. Required: 1) List the violations to good internal control procedures for cash. 2) Tell how each violation could possibly cause a gigantic problem. Problem 8-1 Listed below are some of the transactions of the Oates Co. May 1 May 10 May 20 June 19 July 20 Aug. 2 Sept. 1 Nov. 3 Required: Sold merchandise to Williams Co. $750, n/10 Received payment in full from Williams Co., $750. Accepted a $1,500, 30 day, 16% note from Rexl Co. for sale. Rexl Co. dishonored the note. Accepted a $3,000 60-day, 16% note from Samson Firm in extension of time on previous sale. Sold merchandise to ABC Co. $200, n/10. Received payment in full from Samson Firm for July 20, $3,000 sale. Wrote off the Rexl Co. dishonored note from May 20 sale. Assume the Oates Co. uses the allowance method to write off accounts. 1.) Prepare general journal entries for the transactions. Problem 8-2 The Cascot Firm has the following transactions: Jan. 10 Jan. 21 Feb. 2 Feb. 9 Feb. 20 Oct. 30 Dec. 1 Required: Sold merchandise to Lovely Firm in the amount of $795. Accepted a 30- day, 10% note. Accepted a $1250, 30-day, 10% note as a time extension on payment of a previous sale from the Phackson Firm. Received payment on a previously granted note. The payment was $718, which included $18 of interest. Received payment in full from the Jan. 10th sale to the Lovely Firm. The Phackson Firm dishonored the Jan 21st note. Wrote off the Phackson note as uncollectible. Surprisingly received payment in full from the Phackson Firm. The payment equals the original maturity value of the note. Assume the Cascot Firm uses the allowance method to write off accounts. 1.) Prepare the general journal entries to record the transactions. Problem 8-3 Shown below is some Notes Receivable financial data of the Smithson Financial Institute Note $2500, 60-day, 12% $100, 10-day, 18% $955, 90-day, 10% $1800, 120-day, 12% Due Date Interest Maturity Value $1350, 30-day, 16% $5000, 90-day, 10% Required: Prepare the necessary calculations to complete the chart. Problem 9-1 Listed below are the inventory records for the Mason Merchandising Firm. Date Units May Purchase April Purchase Beginning Inventory Unit Cost 7,000 Total Cost 3.00 25,000 21,000 3.10 35,000 77,500 3.15 June Purchase 20.000 110,250 3.27 65.400 Total 87,000 274,150 The ending inventory consists of 10,000 units of which 5,000 units are from the beginning inventory and 5,000 are from the May purchase. Assume that net sales are $500,000 and selling and administrative expenses are $90,000. Required: 1) Prepare an income statement using the specific invoice inventory method. 2) Prepare an income statement using the average unit cost inventory method. 3) Prepare an income statement using the FIFO inventory method. 4) Prepare an income statement using the LIFO inventory method. 169