Question 2 (Total 20 marks) Part A Savoury Company's bank statement for the month of September showed a balance per bank of 4,150. The company's Cash account in the general ledger had a balance of 3,969.85 at September 30. Other information is as follows: (1) Cash receipts for September 30 recorded on the company's books were 3,390 but this amount does not appear on the bank statement, until October 2. (2) The bank statement shows a debit memorandum for 25 for check printing charges. (3) Check no. 119 in the amount of $491 had been entered in the cash journal as $419, and check no. 120 in the amount of $58.20 had been entered as $582. Both checks had been issued to pay for purchases on account on September 13 and 14. (4) The total amount of checks still outstanding at September 30 amounted to 2,136.05. (5) A customer's check for $90 (payment on account) had been entered as $60 in the cash receipts journal by Savoury Company on September 15. (6) The bank returned an NSF check from a customer for 253.20. (7) The bank included a credit memorandum for 1,230.50 which represents collection of a customer's note by the bank for the company; principal amount of the note was 1,200 and interest was 36 and bank had made a charge of $5.50 on the collection. Interest has not been accrued. Required: (a) Prepare a bank reconciliation for Savoury Company at September 30, (3 marks) (b) Prepare any adjusting entries necessary as a result of the bank reconciliation. Omit descriptions for the journal entries. (2 marks) Question 2 (Continued) Part B Senior Company purchased equipment on January 1, 2019 for $135,000. It is estimated that the equipment will have a $7,500 residual value at the end of its 5-year useful life. It is also estimated that the equipment will produce 150,000 units over its 5-year life. Required: Answer the following independent questions. (a) Compute the amount of depreciation expense for the year ended December 31, 2019, using the straight-line method of depreciation. (1 marks) (b) If 24,000 units of product are produced in 2019 and 36,000 units are produced in 2020, what is the book value of the equipment at December 31, 2020? The company uses the units-of- activity depreciation method, (2 marks) (c) If the company uses the double-declining-balance method of depreciation, what is the balance of the Accumulated Depreciation Equipment account at December 31, 2022? (2 marks) Part C Benny has worked for Lau & Lee Co., a local law firm for several years. He is an associate and needs to work long hours. He hasn't taken a vacation in the last three years. Benny is responsible for opening the mail and listing the checks received. He also takes cash from clients after their visits. Sometimes Benny doesn't bother giving each client a receipt for the cash received from their accounts. When he is free, he offers his help to the firm's accountant to post the cash receipts to the clients' accounts receivable and the accountant is happy with his help. Required: Explain and illustrate how the principles of internal control may be violated in this law firm. Please limit your answer to 250 words. (5 marks) Part D You are the accounting manager of Banana Supermarket. One day, the CEO of the supermarket told you "Our supermarket needs internal controls because we cannot trust our employees." Required: Do you agree? Why? How internal control concepts could be applied to the supermarket. Explain and illustrate your answer with example(s). Please limit your answer to 250 words. (5 marks) Question 2 (Total 20 marks) Part A Savoury Company's bank statement for the month of September showed a balance per bank of 4,150. The company's Cash account in the general ledger had a balance of 3,969.85 at September 30. Other information is as follows: (1) Cash receipts for September 30 recorded on the company's books were 3,390 but this amount does not appear on the bank statement, until October 2. (2) The bank statement shows a debit memorandum for 25 for check printing charges. (3) Check no. 119 in the amount of $491 had been entered in the cash journal as $419, and check no. 120 in the amount of $58.20 had been entered as $582. Both checks had been issued to pay for purchases on account on September 13 and 14. (4) The total amount of checks still outstanding at September 30 amounted to 2,136.05. (5) A customer's check for $90 (payment on account) had been entered as $60 in the cash receipts journal by Savoury Company on September 15. (6) The bank returned an NSF check from a customer for 253.20. (7) The bank included a credit memorandum for 1,230.50 which represents collection of a customer's note by the bank for the company; principal amount of the note was 1,200 and interest was 36 and bank had made a charge of $5.50 on the collection. Interest has not been accrued. Required: (a) Prepare a bank reconciliation for Savoury Company at September 30, (3 marks) (b) Prepare any adjusting entries necessary as a result of the bank reconciliation. Omit descriptions for the journal entries. (2 marks) Question 2 (Continued) Part B Senior Company purchased equipment on January 1, 2019 for $135,000. It is estimated that the equipment will have a $7,500 residual value at the end of its 5-year useful life. It is also estimated that the equipment will produce 150,000 units over its 5-year life. Required: Answer the following independent questions. (a) Compute the amount of depreciation expense for the year ended December 31, 2019, using the straight-line method of depreciation. (1 marks) (b) If 24,000 units of product are produced in 2019 and 36,000 units are produced in 2020, what is the book value of the equipment at December 31, 2020? The company uses the units-of- activity depreciation method, (2 marks) (c) If the company uses the double-declining-balance method of depreciation, what is the balance of the Accumulated Depreciation Equipment account at December 31, 2022? (2 marks) Part C Benny has worked for Lau & Lee Co., a local law firm for several years. He is an associate and needs to work long hours. He hasn't taken a vacation in the last three years. Benny is responsible for opening the mail and listing the checks received. He also takes cash from clients after their visits. Sometimes Benny doesn't bother giving each client a receipt for the cash received from their accounts. When he is free, he offers his help to the firm's accountant to post the cash receipts to the clients' accounts receivable and the accountant is happy with his help. Required: Explain and illustrate how the principles of internal control may be violated in this law firm. Please limit your answer to 250 words. (5 marks) Part D You are the accounting manager of Banana Supermarket. One day, the CEO of the supermarket told you "Our supermarket needs internal controls because we cannot trust our employees." Required: Do you agree? Why? How internal control concepts could be applied to the supermarket. Explain and illustrate your answer with example(s). Please limit your answer to 250 words