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ACCOUNTI 2140-The internal control procedures in Valentine Company

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ACCOUNTI 2140-The internal control procedures in Valentine Company

Brief Exercise 7­4The internal control procedures in Valentine Company provide that:Identify the principles of internal control that are being followed.1.Employees who have physical custody of assets do not have access to theaccounting records.2.Each month, the assets on hand are compared to the accounting records by aninternal auditor.3.A prenumbered shipping document is prepared for each shipment of goods tocustomers.Brief Exercise 7­5Rosenquist Company has the following internal control procedures over cash receipts.Identify the internal control principle that is applicable to each procedure.1. All over­the­counter receipts are entered in cash registers.2. All cashiers are bonded.3. Daily cash counts are made by cashier department supervisors.4.The duties of receiving cash, recording cash, and custody of cash are assigned todifferent individuals.5. Only cashiers may operate cash registers.Exercise 7­7Setterstrom Company established a petty cash fund on May 1, cashing a check for $125. The companyreimbursed the fund on June 1 and July 1 with the following results.June 1: Cash in fund$3.55.July 1: Cash in fund$4.15.Receipts: delivery expense $27.45, postage expense $36.25, and miscellaneousexpense $55.60.Receipts: delivery expense $18.90, entertainment expense $52.25, and miscellaneousexpense $49.70.On July 10, Setterstrom increased the fund from $125 to $155.Prepare journal entries for Setterstrom Company. (Credit account titles are automatically indented whenamount is entered. Do not indent manually. Record journal entries in the order presented in theproblem. Round answers to 2 decimal places, e.g. 52.75.)DateJune 1Account Titles and ExplanationDebitCreditJuly 1Exercise 7­8Horvath Company uses an imprest petty cash system. The fund was established on March 1 with a balance of$110. During March, the following petty cash receipts were found in the petty cash box.DateReceipt No.ForAmount3/51Stamp Inventory72Freight­Out$382093Miscellaneous Expense14114Travel Expense23145Miscellaneous Expense8The fund was replenished on March 15 when the fund contained $5 in cash. On March 20, the amount in thefund was increased to $195.Journalize the entries in March that pertain to the operation of the petty cash fund. (Credit account titles areautomatically indented when amount is entered. Do not indent manually. Record journal entries inthe order presented in the problem.)DateAccount Titles and ExplanationDebitCreditMar. 15Exercise 7­9 (Part Level Submission)Don Wyatt is unable to reconcile the bank balance at January 31. Don’s reconciliation is as follows.Cash balance per bankAdd: NSF checkLess: Bank service charge$3,860.20540.0033.00Adjusted balance per bank$4,367.20Cash balance per books$4,175.20Less: Deposits in transit680.00Add: Outstanding checks938.00Adjusted balance per books$4,433.20(a)Prepare a correct bank reconciliation. (List items that increase cash balance first. Reconcile cashbalance per bank first. Round answers to 2 decimal places, e.g. 52.75.)Don WyattBank ReconciliationJanuary 31$::$$:$$(b)Journalize the entries required by the reconciliation. (Credit account titles are automatically indentedwhen amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 52.75.)No. Account Titles and ExplanationDebitCredit1.(To record NSF check.)2.(To record bank service charge.)Exercise 7­12 (Part Level Submission)The information below relates to the Cash account in the ledger of Minton Company.Balance September 1—$17,320?Cash deposited—$64,280.Balance September 30—$18,404? Checks written—$63,196.The September bank statement shows a balance of $17,422 on September 30 and the following memoranda.CreditsDebitsCollection of $1,990 note plus interest $40Interest earned on checking account$2,030$55NSF check: Richard NanceSafety deposit box rent$925$75At September 30, deposits in transit were $4,950, and outstanding checks totaled $2,883.(a)Prepare the bank reconciliation at September 30. (List items that increase cash balance first. Reconcilecash balance per bank first.)MINTON COMPANYBank ReconciliationSeptember 30$::$$:$:$(b)Prepare the adjusting entries at September 30, assuming (1) the NSF check was from a customer on account,and (2) no interest had been accrued on the note. (Credit account titles are automatically indented whenamount is entered. Do not indent manually.)DateAccount Titles and ExplanationSept. 30(To record note receivable.)Sept. 30DebitCredit(To record interest earned.)Sept. 30(To record NSF check.)Sept. 30(To record safety deposit rent.)Problem 7­2A (Part Level Submission)Forney Company maintains a petty cash fund for small expenditures. The following transactions occurred over a2­month period.July1 Established petty cash fund by writing a check on Scranton Bank for $205.15 Replenished the petty cash fund by writing a check for $201.30. On this date the fund consisted of$3.70 in cash and the following petty cash receipts: freight­out $93.00, postage expense $40.80,entertainment expense $47.10, and miscellaneous expense $18.80.31 Replenished the petty cash fund by writing a check for $196.30. At this date, the fund consisted of$8.70 in cash and the following petty cash receipts: freight­out $80.10, charitable contributions expense$44.40, postage expense $43.60, and miscellaneous expense $28.20.Aug. 15 Replenished the petty cash fund by writing a check for $191.60. On this date, the fund consisted of$13.40 in cash and the following petty cash receipts: freight­out $73.40, entertainment expense$41.40, postage expense $32.30, and miscellaneous expense $45.80.16 Increased the amount of the petty cash fund to $325 by writing a check for $120.31 Replenished the petty cash fund by writing a check for $308.70. On this date, the fund consisted of$16.30 in cash and the following petty cash receipts: postage expense $139.20, travel expense $95.20,and freight­out $72.50.(a)Journalize the petty cash transactions. (Credit account titles are automatically indented when amount isentered. Do not indent manually. Record journal entries in the order presented in the problem. Roundanswers to 2 decimal places, e.g. 52.75.)DateAccount Titles and ExplanationJuly 15July 31Aug. 15DebitCreditAug. 31(b)Post to the Petty Cash account.Petty CashDateExplanation Ref.DebitCreditBalanceCPCPProblem 7­4A (Part Level Submission)The bank portion of the bank reconciliation for Langer Company at November 30, 2017, was as follows.LANGER COMPANYBank ReconciliationNovember 30, 2017Cash balance per bank$14,467.90Add: Deposits in transit2,530.2016,998.10Less: Outstanding checksCheck NumberCheck Amount3451$ 2,260.403470720.103471844.5034721,426.8034741,058.20Adjusted cash balance perbank6,310.00$10,688.10The adjusted cash balance per bank agreed with the cash balance per books at November 30.The December bank statement showed the following checks and deposits.Bank StatementChecksDateNumberDepositsAmountDateAmount12­13451$2,260.4012­1$ 2,530.2012­23471844.5012­41,211.6012­734721,426.8012­82,365.1012­434751,640.7012­162,672.7012­834761,300.0012­212,945.0012­1034772,130.0012­262,567.3012­1534793,080.0012­292,836.0012­273480600.0012­3012­303482475.5012­2934831,140.0012­3134851,025.00$18,152.90Total540.80Total$15,438.70The cash records per books for December showed the following.Cash Payments JournalDateNumberAmountCash Receipts JournalDateNumberAmountDateAmount12­13475$1,640.7012­203482$475.5012­3$ 1,211.6012­234761,300.0012­2234831,140.0012­72,365.1012­234772,130.0012­233484789.8012­152,672.7012­43478621.3012­243485450.8012­202,954.0012­834793,080.0012­303486889.5012­252,567.3012­103480600.00$13,925.0012­282,836.0012­173481807.4012­301,025.00Total12­31Total1,690.40$17,322.10The bank statement contained two memoranda:1. A credit of $5,245 for the collection of a $5,100 note for Langer Company plus interest of $160.00 and lessa collection fee of $15.00. Langer Company has not accrued any interest on the note.A debit of $581.00 for an NSF check written by L. Rees, a customer. At December 31, the check had not2.been redeposited in the bank.At December 31, the cash balance per books was $14,085.20, and the cash balance per the bank statementwas $21,846.10. The bank did not make any errors, but two errors were made by Langer Company.(a)Using the four steps in the reconciliation procedure, prepare a bank reconciliation at December 31. (Roundanswers to 2 decimal places, e.g. 52.75. List items that increase cash balance first. Reconcile cashbalance per bank first.)LANGER COMPANYBank ReconciliationDecember 31, 2017$::$$$::$$(b)Prepare the adjusting entries based on the reconciliation. (Credit account titles are automatically indentedwhen amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 52.75.For error in check and deposit use accounts payable and accounts receivable.)DateAccount Titles and ExplanationDec. 31(To record collection of note receivable by bank)Dec. 31(To record NSF Check)Dec. 31(To correct error in recording check)Dec. 31(To correct error in deposit)DebitCredit



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