Acct 502 horngren’s financial and managerial accounting bookmark

Acct 502 

Horngren’s Financial and Managerial Accounting bookmark Acct 502 Horngren’s Accounting, The Financial ChaptersRead chapters 8 and 9. spreadsheet  grand canyon university  accounting for notes recievable

SModule 4 Assignment Details:

Complete the following exercises and problems in Excel:

P8-22A

P8-25A

P9-28A

P9-31A

Save the file using the filename “LastnameFirstinitial.ACC502.M#” where the # is the module number. For example, John Doe’s homework for module 1 would be saved as DoeJ.ACC502.M1.

Module 4 Assignment I LoudCloud Sy… Grand Canyon University – Digital Res… horngrens_accounting_the_financi…

P8-22a

iL Correcting internal control weakness

Each of the following situations has an internal control weakness.

a. Upside-Down Applications develops custom programs to customer’s specifica¬tions. Recently, development of a new program stopped while the programmers redesigned Upside-Down’s accounting system. Upside-Down’s accountants could have performed this task.

b. Norma Rottler has been your trusted employee for 24 years. She performs all cash-handling and accounting duties. Ms. Rottler just purchased a new Lexus and a new home in an expensive suburb. As owner of the company, you wonder how she can afford these luxuries because you pay her only $30,000 a year and she has no source of outside income.

c. Izzie Hardwoods, a private company, falsified sales and inventory figures in order to get an important loan. The loan went through, but Izzie later went bankrupt and could not repay the bank

d. The office supply company where Pet Grooming Goods purchases sales receipts recently notified Pet Grooming Goods that its documents were not pre-numbered. Howard Mustro, the owner, replied that he never uses receipt numbers.

e. Discount stores such as Cusco make most of their sales in cash, with the remainder in credit card sales. To reduce expenses, one store manager ceases purchasing fidelity bonds on the cashier.

f. Cornelius’ Corndogs keeps all cash receipts in an empty box for a week because he likes to go to the bank on Tuesdays when Joann is working.

Requirements

1. Identify the missing internal control characteristics in each situation.

2. Identify the possible problem caused by each control weakness.

         P8-22a

      Propose a solution to each internal control problem.

explanation.

113-25A  Preparing a bank reconciliation and journal entries 

The December cash records of Dunlap Insurance follow:

Cash Receipts Cash Payments

Date Cash Debit Check No. Cash Credit

Dec. 4 $ 4,170 1416 $ 860

9 510 1417 130

14 530 1418 650

17 2,180 1419 1,490

31 1,850 1420 1,440

1421 900

1422 630

Dunlap’s Cash account shows a balance of $16,240 at December 31. On 

December 31, Dunlap Insurance received the following bank statement:

Beginning Balance Deposits and other Credits: S 14E._ .

Dec. 1 EFT $ 300

Dec. 5 4,170

Dec. 10 510

Dec. 15 530

Dec. 18 2,180

Dec. 22 BC 14130 9.090

Checks and other Debits:

Dec. 8 NSF 1,0D0

Dec. 11 (check no 6) 860

Dec. 19 EFT 200

Dec. 22 (check no 7) 130

Dec. 29 (check no. 8) 650

Dec. 31 (check to 1419) 1940

Dec. 31 SC 60 (5.340)

Ending Balance 517,350

Explanations: BC-bank collection; EFT-electronic funds trauier, NSF-nonsufficient funds checks; SC-service charge

Additional data for the bank reconciliation follows:

a. The EFT credit was a receipt of rent. The EFT debit was an insurance payment.

b. The NSF check was received horn a customer.

c. The $1,400 bank collection was for a note receivable.

d. The correct amount of check 1419, for rent expense, is $1,940. Dunlap’s controller mistakenly recorded the check for $1,490.

Requirements

1. Prepare the bank reconciliation of Dunlap Insurance at December 31, 2015.

2. Journalize any required entries from the bank reconciliation.

P9-28A Accounting for mcollectible accounts using the allowance method (aging-of-receivables), and reporting receivables on the balance sheet At September 30, 2014, the accounts of Mountain Terrace Medical Center

(M MC) include the following:

Account Receivable 1 145,000

Allowance for Bad Debt (credit balance) 3,500

During the last quarter of 2014, MTMC completed the following selected transactions:

Dec. 28 Wrote off account receivable as uncollectible: Regan,

Co., 11,300; Owen Mac, $900, and Rain, Inc, $700

31 Reconled bad debts expense based on the aging 

of account receivable, as follows:

Age of Accounts

Account Receivable 1-30 Days 31-60 Days 61-90 Days Over 90 Days

1165,000

Estimated percent uncollectible $97,000

0.3% $37,000

3% $14,000

30% $17,000

35%

Requirements

1. Journalize the transactions.

2. Open the Allowance for Bad Deb. T-account, and post entries affecting that account. Keep a running balance.

3. Show how Mountain Terrace Medical Center should report net accounts receivable on its December 31, 2014, balance sheet.

P9-28A Accounting for uncollectible accounts using the allowance method

(aging-of-receivables), and reporting receivables on the balance sheet At September 30, 2014, the accounts of Mountain Terrace Medical Center (MTMC) include the following:

Account Receivable 1 145,000

Allowance for Bad Debt (credit balance) 3,500

During the last quarter of 2014, MTMC completed the following selected transactions:

Dec. 28 Wrote off account receivable as uncollectible: Regan,

Co., $1,300, Owen Mac, $900; and Rain, Inc., $700

31 Recorded bad debts expense based on the aging

of accounts receivable, as follows:

Age of Accounts

Account Receivable 1-30 Days 31-60 Days 61-90 Days Over 90 Days

1165,000

Estimated percent uncollectible $97,000

0.3% $37,000

3% $14,000

30% $17,000

35%

Requirements

1. Journalize the transactions.

2. Open the Allowance for Bad Deb. T-account, and post entries affecting that account. Keep a running balance.

3. Show how Mountain Terrace Medical Center should repon net accounts receivable on its December 31, 2014, balance sheet

P8-22a

iL Correcting internal control weakness

Each of the following situations has an internal control weakness.

a. Upside-Down Applications develops custom programs to customer’s specifica¬tions. Recently, development of a new program stopped while the programmers redesigned Upside-Down’s accounting system. Upside-Down’s accountants could have performed this task.

b. Norma Rottler has been your trusted employee for 24 years. She performs all cash-handling and accounting duties. Ms. Rottler just purchased a new Lexus and a new home in an expensive suburb. As owner of the company, you wonder how she can afford these luxuries because you pay her only $30,000 a year and she has no source of outside income.

c. Izzie Hardwoods, a private company, falsified sales and inventory figures in order to get an important loan. The loan went through, but Izzie later went bankrupt and could not repay the bank

d. The office supply company where Pet Grooming Goods purchases sales receipts recently notified Pet Grooming Goods that its documents were not pre-numbered. Howard Mustro, the owner, replied that he never uses receipt numbers.

e. Discount stores such as Cusco make most of their sales in cash, with the remainder in credit card sales. To reduce expenses, one store manager ceases purchasing fidelity bonds on the cashier.

f. Cornelius’ Corndogs keeps all cash receipts in an empty box for a week because he likes to go to the bank on Tuesdays when Joann is working.

Requirements

1. Identify the missing internal control characteristics in each situation.

2. Identify the possible problem caused by each control weakness.

Propose a solution to each internal control problem

Dunlap’s Cash account shows a balance of $16,240 at December 31. On 

December 31, Dunlap Insurance received the following bank statement:

Beginning Balance Deposits and other Credits: S 14E._ .

Dec. 1 EFT $ 300

Dec. 5 4,170

Dec. 10 510

Dec. 15 530

Dec. 18 2,180

Dec. 22 BC 14130 9.090

Checks and other Debits:

Dec. 8 NSF 1,0D0

Dec. 11 (check no 6) 860

Dec. 19 EFT 200

Dec. 22 (check no 7) 130

Dec. 29 (check no. 8) 650

Dec. 31 (check to 1419) 1940

Dec. 31 SC 60 (5.340)

Ending Balance 517,350

Additional data for the bank reconciliation follows:

a. The EFT credit was a receipt of rent. The EFT debit was an insurance payment.

b. The NSF check was received horn a customer.

c. The $1,400 bank collection was for a note receivable.

d. The correct amount of check 1419, for rent expense, is $1,940. Dunlap’s controller mistakenly recorded the check for $1,490.

Requirements

1. Prepare the bank reconciliation of Dunlap Insurance at December 31, 2015.

2. Journalize any required entries from the bank reconciliation.

P9-31a

Dec. 5 Collected in full on account from Ambiance, Corp.

31 Accrued the interest on the Creed, Inc. note. P9-31a

Record the transactions in the journal of Relaxing Recliner Chairs. Explanations

are not required. (For notes stated in days, use a 360-day year. Round to the nearest dollar.)

Accounting for notes receivable and accruing interest Learning Objective 4

Kelly Realty loaned money and received the following notes during 2014.

1. Note 3—Jan. 18, 2015

Note Date Principal Amount Interest Rate Term

(1) Aug.1 $ 24,000 17% 1 year

(2) Nov. 30 18,000 6% 6 months

(3) Dec. 19 12,000 12% 30 days

Requirements

1. Determine the maturity date and maturity value of each note.

2. Journalize the entry to record the inception of each of the three notes and also journalize a single adjusting entry at December 31, 2014, the fiscal year-end, to record accrued interest revenue on all three notes. Explanations are not required.

3. Journalize the collection of principal and interest at maturity of all three notes. Explanations are not required.

Homgren’s Accounting, The Financial Chapters, Tenth Edition, by Tracie Nobles, Brenda Mattison, and Ella Mae Matsumura. Published by Prentice Hall.