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 Snow?s 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 Snow?s 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:

SHC?s 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 SHC?s 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 SHC?s account for another company?s 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.

Requirements

Prepare the bank reconciliation for SHC.

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

UNIT 3 EXERCISES 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 Snow's chequebook lists the following: Date Nov Cheque # Item Cheque Deposit 1 4 Balance $705 622 9 Direct Energy $19 Dividends 686 $116 802 13 623 Canadian Tire 43 759 14 624 PetroCanada 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 Am oun 116 t Deduct cheques $19 N Other charges: o . 6 2 2 6 2 3 6 2 4 43 85 NSF cheque 50 $8 Service charge 12 Balance $604 6 Prepare John Snow's bank reconciliation at November 30th 2 5 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: 1. SHC's Cash account shows a balance of $2,256.14 on October 31. 2. The October 31 bank balance is $4,023.05. 3. The bank statement shows that SHC earned $38.19 of interest on its bank balance during October. This amount was added to SHC's bank balance. 4. SHC pays utilities of $250 and insurance of $100 by EFT. 5. 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 6. The bank statement includes a donation of $850, electronically deposited to the bank for SHC. 7. The bank statement lists a $10.50 bank service charge. 8. On October 31, the SHC treasurer deposited $16.15, which will appear on the November bank statement. 9. The bank statement includes a $300 deposit that SHC did not make. The bank added $300 to SHC's account for another company's deposit. 10. 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. Requirements 1. Prepare the bank reconciliation for SHC. 2. Journalize the October 31 transactions needed to update SHC's Cash account. You do not need to include an explanation for each entry