Assessment : Internal Control and Accounting for Assets Worksheet
Use Attached worksheet to complete the following three exercises for Assessment.
Exercise 1:
Based on the information provided, complete the following tasks:
1. Prepare an October 31, 2012, bank reconciliation for the Scheiffer Company.
| |
SCHEIFFER COMPANY
Bank Reconciliation
October 31, 2012
|
|
Date
|
Check #
|
Credit/Debit
|
Amount
|
Balance
|
|
9/30/2012
|
|
|
|
$16,345.50
|
|
2-Oct
|
6798
|
Debit
|
1315.5
|
$15,030.00
|
|
4-Oct
|
|
Credit
|
1214.5
|
$16,244.50
|
|
5-Oct
|
7002
|
Debit
|
815
|
$15,429.50
|
|
9-Oct
|
7001
|
Debit
|
1788.5
|
$13,641.00
|
|
11-Oct
|
|
Credit
|
2054.55
|
$15,695.55
|
|
|
|
|
|
|
|
19-Oct
|
7004
|
Debit
|
954
|
$14,741.55
|
|
20-Oct
|
|
Credit
|
3990.25
|
$18,731.80
|
|
22-Oct
|
7003
|
Debit
|
405.35
|
$18,326.45
|
|
23-Oct
|
|
Credit
|
2436.8
|
$20,763.25
|
|
25-Oct
|
7005
|
Debit
|
1955.95
|
$18,807.30
|
|
26-Oct
|
7007
|
Debit
|
310.35
|
$18,496.95
|
|
29-Oct
|
|
Credit
|
20.75
|
$18,517.70
|
|
|
|
|
|
|
|
30-Oct
|
7009
|
Debit
|
1695.15
|
$16,822.55
|
|
10/31/2012
|
|
|
|
$16,822.55
|
2. Make the necessary journal entries to adjust the book balance of cash to the reconciled balance.
|
Date
|
Check #
|
Credit/Debit
|
Amount
|
Balance
|
|
9/30/2012
|
|
|
|
$16,345.50
|
|
2-Oct
|
6798
|
Debit
|
1315.5
|
$15,030.00
|
|
4-Oct
|
|
Credit
|
1214.5
|
$16,244.50
|
|
5-Oct
|
7002
|
Debit
|
815
|
$15,429.50
|
|
9-Oct
|
7001
|
Debit
|
1788.5
|
$13,641.00
|
|
11-Oct
|
|
Credit
|
2054.55
|
$15,695.55
|
|
15-Oct
|
NSF
|
Debit
|
605.75
|
$15,089.80
|
|
19-Oct
|
7004
|
Debit
|
954
|
$14,135.80
|
|
20-Oct
|
|
Credit
|
3990.25
|
$18,126.05
|
|
22-Oct
|
7003
|
Debit
|
405.35
|
$17,720.70
|
|
23-Oct
|
|
Credit
|
2436.8
|
$20,157.50
|
|
25-Oct
|
7005
|
Debit
|
1985.95
|
$18,171.55
|
|
26-Oct
|
7007
|
Debit
|
310.35
|
$17,861.20
|
|
29-Oct
|
|
Credit
|
20.75
|
$17,881.95
|
|
29-Oct
|
|
Credit
|
1430
|
$19,311.95
|
|
30-Oct
|
7009
|
Debit
|
1695.15
|
$17,616.80
|
|
10/31/2012
|
|
|
|
$17,616.80
|
3. For distinguished performance, provide three possible reasons why some of the numbered checks in the sequence are missing from the bank statement.
a. One possible reason checks are not included in the sequence is that they are voided, never used, and have no amounts to be recorded
b. Another possible reason is the checks have not been cashed yet.
c. A third possible reason that check are not included is that the checks were canceled.
Exercise 2
Prepare journal entries for the Russell Company's 2011 and 2012 transactions summarized below and the company's year-end adjustments to Bad Debts Expense. Round off all amounts to the nearest dollar.
Note: The company uses a perpetual inventory system.
Summarized Transactions
The Russell Company began operations on January 1, 2011, and completed several transactions that involved credit sales, accounts receivable collections, and bad debts.
2011
• Sold merchandize that cost $1,350,000, on credit, for $1,575,000. Terms n/30.
• Wrote off $18,100 of accounts receivable that were uncollectible.
• Received cash in the amount of $822,500 as accounts receivables payments.
• In performing year-end account adjustments, the company estimated that 2 percent of accounts receivables will not be collectible.
|
Debit
|
Credit
|
|
|
Sales
|
|
$1,350,000.00
|
|
|
Credit Remaining
|
$225,000.00
|
|
|
|
Accounts Receivable
|
$18,100.00
|
|
|
|
Cash
|
|
$822,500.00
|
|
|
Total
|
$243,100.00
|
$2,172,500.00
|
1.12%
|
2012
• Sold merchandize that cost $1,325,000, on credit, for $1,592,000. Terms n/30.
• Wrote off $24,500 of accounts receivable that were uncollectible.
• Received cash in the amount of $1,428,300 as accounts receivables payments.
• In performing year-end account adjustments, the company estimated that 2 percent of accounts receivables will not be collectible.
|
Debit
|
Credit
|
|
|
Sales
|
|
$1,350,000.00
|
|
|
Credit Remaining
|
$225,000.00
|
|
|
|
Accounts Receivable
|
$18,100.00
|
|
|
|
Cash
|
|
$822,500.00
|
|
|
Total
|
$243,100.00
|
$2,172,500.00
|
1.12%
|
Exercise 3
On January 1, the Hanover Beverage Company replaced the palletizing machine on one of its juice lines. The cost of the machine was $195,000. The machine's expected life is five years or 480,000 units, and its estimated salvage value is $19,500.
The following numbers of units were produced over the next four years:
|
Year
|
Units
|
|
1
|
121,000
|
|
2
|
119,500
|
|
3
|
122,600
|
|
4
|
123,000
|
At the end of the 4th year, the total number of units produced exceeded expectations.
Note: Depreciation cannot drop below its estimated salvage value.
Determine the depreciation on the palletizer for each of the four years, as well as the combined total for all four years. Use two of the following three methods of depreciation. For distinguished performance, use all three methods. Round your answers to the nearest dollar.
• Straight-line
Purchase cost - estimated salvage value = depreciable asset cost
? $195,000 - $19,500 = $175,500
1/year of useful life = % depreciation rate per year
? 1/5 = 20%
% depreciation rate x depreciable asset cost = annual depreciation
? 20% x $175,500 = $35,100 annual depreciation
• Units-of-production.
Asset Cost - Salvage Value = Depreciable Base
? $195,000 - $19,500 = $175,500
Depreciable Base / Total Units = Depreciation per Unit
? $175,500 / 480,000 = $0.3656
Depreciation per Unit x Number of Units Produced in a Period = Depreciation per Period
? $0.3656 x 121,000 = $44,237.60 year 1
? $0.3656 x 119,500 = $43,689.20 year 2
? $0.3656 x 122,600 = $44,822.56 year 3
? $0.3656 x 123,000 = $44,968.80 year 4
• Double-declining-balance.
Attachment:- FINANCIAL ACCOUNTING PRINCIPLES-assessment.rar