Assignment 4

This assignment is out of 58 marks and is weighted as 5% in your final grade.

Question 1

1. Cashiers are experienced, so they are not bonded.

2. The receptionist records all incoming customer cash receipts for her employer and writes up the daily deposit slip to be taken to the bank by her employer.

3. To minimize the risk of robbery, when there is more than $100 in cash it is stored in an unlocked desk drawer in a back room until it is deposited in the bank.

4. At the end of each day, the total receipts are counted by the cashier on duty and reconciled to the cash register total, there is no supervisor present at the time of counting or reconciliation.

5. The company accountant makes the bank deposit and then records the day's receipts.

6. If a customer has exact change and does not want a receipt, the sale is not rung through the cash register.

Required For Each Procedure:

1. State the weakness.

2. State the Control Activity that is violated.

3. Make a recommendation to correct the weakness. (short one sentence answer required for part 1 and 2 and 3)

Question 2

Lang Company completed the following petty cash transactions during April 2018

Date	Receipt #	For	Amount
April 10		Cheque to establish Petty Cash Fund	$100
April 15	1	Paid courier, to deliver goods sold to a customer	$14.10
April 17	2	Freight for inventory purchased(Perpetual system)	$28.90
April 19	3	Receipt from Staples for paper	$11.45
April 21	4	Receipt from Petro Canada	$38.00
April 24	5	Postage	$5.55
April 25		Fund counted, funds remaining	$4.00

Required:

1. Prepare a journal entry to record the establishing the petty cash fund.

2. Prepare a journal entry to record the reimbursement and increase of the fund to $125. (from $100 to $125)

3. Now assume, the Part 2 did not happen and the fund decreased from $100 to $75, prepare a journal entry to record the reimbursement and decrease of the fund

Note: Parts 2 and 3 are not related.

Question 3: The Agricultural Genetics Company's account in its general ledger reported a balance of $9,448 on May 31, 2017. The company's bank statement from Western Bank reported a balance of $11,689 on the same date.

A comparison of the details in the Cash account revealed the following facts:

1. The bank statement included a debit memo of $50 for bank service charges.

2. Cash sales of $638 on May 12 were deposited in the bank. The journal entry to record the cash sales and the deposit slip to the cash were correctly made out for $638. The bank credited Agricultural Co. for $386.

3. The April 30 deposit of $2,190 was included on the May bank statement. The deposit had been placed in the bank's night deposit vault on April 30.

4. The May 31 deposit of $1,141 was not included on the May bank statement. The deposit had been placed in the bank night deposit vault on May 31.

5. Cheque #928 for $233 and #1014 for $689 were outstanding on April 30. Of these, #1014 cleared the bank in May. All of the cheques written in May except for #1127 for $732, #1195 for $813, and #1196 for $401 had cleared the bank by May 31.

6. On May 18, the company issued cheque #1151 for $585 to L. Kingston on account. The cheque which cleared the bank in May was incorrectly recorded and posted by Agricultural Co for $855.

7. On May 28, the company issued cheque #1192 for $1,738 for computer equipment. The cheque was incorrectly recorded by Agricultural Co as $1,387. The cheque cleared the bank on May 30.

8. A review of the bank statement revealed that Agricultural Co. received $2,382 of EFT payments from customers on account in May. The bank had also credited the company's account with $24 of interest revenue on May 31. The company had no previous notice of these amounts.

9. On May 31, the bank statement showed an NSF charge of $820 for a cheque issued by Pete Dell, a customer to Agricultural Genetics Company on account. This NSF charge included a $15 service charge by the bank.

Required:

1. Prepare a bank reconciliation in good form at May 31, 2017.

2. Prepare the necessary journal entries to bring the General Ledger Cash account into agreement with the adjusted balance on the bank reconciliation.

Question 4:

The Brown Company bank statement for September 30, 2019 showed a balance of $1,681.50. The company's cash account showed a $1,305.20 debit balance. The following information was also available.

(a) A customer's cheque for $90 marked NSF was returned to Brown Company by the bank. The bank charged the company's account a $10 processing fee.

(b) The September 30 cash receipts, $1,250, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the bank statement.

(c) A $15.10 debit memorandum for cheques printed by the bank was included with the cancelled cheques.

(d) Outstanding cheques amounted to $1,141.40.

(e) A customer's note for $920 was collected by the bank. A collection fee of $20 was deducted by the bank.

(f) Included with the cancelled cheques was a cheque for $300, drawn on another company, The Browne Bros. The Brown Company does not do business with The Browne Bros.

Required: 1.

Prepare a bank reconciliation in good form at September 30, 2019.

2. Prepare the necessary journal entries to bring the General Ledger Cash account into agreement with the adjusted balance on the bank reconciliation