會計學原理19版練習答案：Chapter_08_Cash and Internal Controls

1、McGraw-Hill Companies, 2009Solutions Manual, Chapter 8485Chapter 8Cash and Internal ControlsQUESTIONS1.The seven broad principles are: Establish responsibilities; Maintain adequate records; Insure assets and bond key employees; Separate recordkeeping from custody of assets; Divide responsibilities f

2、or related transactions; Apply technology controls; Perform regular and independent reviews.2. Internal control procedures become especially critical when the manager of a business can no longer control the business through personal supervision and direct participation.3.Responsibility for related t

3、ransactions should be divided so that the work of one department or individual acts as a check on that of another.4.Separation of custody from recordkeeping of an asset encourages the asset custodian to avoid misplacing, misappropriating, or wasting the asset. This arrangement makes collusion necess

4、ary if an asset is to be stolen and the theft concealed in the records.5.If individual departments were permitted to deal directly with suppliers, the amount of merchandise purchased and the resulting liabilities would not be well controlled. Having individual departments place orders through a purc

5、hasing department helps control the amounts purchased and the resulting liabilities. 6.The limitations of internal control arise from two sources: the human element (human error or human fraud) and the cost-benefit principle.7.Cash is most liquid; and least liquid is a building. The four assets orde

6、red from most to least liquid are: cash, accounts receivable, inventory, and building.8.A petty cash receipt is a document stating that a payment has been made from petty cash. The one who received payment and the one who approved payment both sign the receipt.9.Depositing all receipts on the day of

7、 receipt (1) creates an independent record of the amount of cash received and (2) helps prevent an employee from having personal use of the money for a period of time before depositing it.10. During the year ended March 5, 2007, cash (and equivalents) of $780,000,000 is used by investing activities.

8、 Cash (and equivalents) of $513,000,000 is used by financing activities.11. Circuit Citys cash at February 28, 2007, equals $141,141,000. It is the fourth largest current asset, after Merchandise inventory, Short-term investments, and Accounts receivable. Cash comprises about 5% current assets.Its C

9、ash decreased from $315,970,000 at February 28, 2006, to $141,141,000 at February 28, 2007. As a percent of total current assets, its Cash balance decreased from about 11% to about 5%12. Although RadioShacks net income was $73,400,000, it had a net increase in cash and cash equivalents of $248,000,0

10、00. They are different because (1) net income is calculated on the accrual basis, and includes some noncash transactions and (2) some transactions affect cash but not income. For instance, the purchase of property, plant, and equipment assets reduces cash, but does not affect income, except through

11、depreciation over the life of the asset.13. Apples cash and equivalents increased by $2,901,000,000 during the fiscal year ended September 30, 2006; from $3,491,000,000 to $6,392,000,000. Its statement of cash flows identifies several causes for this change. Three major sources and uses are: (1) $2,

12、220,000,000 from operating activities; (2) 357,000,000 provided by investing activities; and (3) $324,000,000 provided by financing activities. QUICK STUDIESQuick Study 8-1 (10 minutes)1.The main objective of internal control procedures is to safeguard the assets of the business. This objective is b

13、est accomplished by designing an operational system with managerial policies that protect the assets from waste, fraud and theft. The system should be designed in compliance with the seven broad principles of internal control that are described in the chapter.2. Separation of recordkeeping for asset

14、s from the custody over assets is intended to reduce theft and fraud. If this fundamental principle is followed, there has to be collusion between two or more employees for assets to be stolen and the theft to be concealed in the records.3. The responsibility for a transaction should be divided betw

15、een two or more individuals or departments to ensure that the work of one acts as a check on the other. Absent this, someone could create fictitious invoices and pay the money to herself or himself.McGraw-Hill Companies, 2009Solutions Manual, Chapter 8487Quick Study 8-2 (10 minutes)1.The cash catego

16、ry includes currency and coins along with the amounts on deposit in bank accounts, checking accounts, and savings accounts. Cash also includes items that are acceptable for deposit in these accounts including customer checks, cashier checks, certified checks, and money orders. 2.The cash equivalents

17、 category includes short-term, highly liquid investment assets meeting two criteria: (1) readily convertible to a known cash amount and (2) sufficiently close to their due dates so that their market value is not sensitive to interest rate changes. Usually only investments purchased within 3 months o

18、f their due date satisfy these criteria. Examples of cash equivalents include U.S. Treasury bills and money market funds.3. Liquidity refers to a companys ability to pay for its near-term obligations.Quick Study 8-3 (10 minutes)1.A liquid asset refers to an asset that can be readily converted into a

19、nother type of asset or be used to satisfy an obligation. A cash equivalent is a highly liquid short-term investment that can be readily converted to a known amount of cash and is sufficiently close to its maturity date so that its market value is relatively insensitive to interest rate changes.2.Co

20、mpanies usually invest idle cash in cash equivalents to earn a higher return on these assets.3.Effective cash management applies the following five principles:a.Encourages collection of receivables.b.Delays payment of liabilities.c.Keeps only necessary levels of assets.d.Plans expenditures.e.Invests

21、 any excess cash.Quick Study 8-4 (10 minutes)1.The three basic guidelines for safeguarding cash are: (a) Separate the duties of those who handle (have custody of) cash from those that keep cash records.(b) Require that all cash receipts be deposited daily.(c) Require that all cash disbursements be m

22、ade by check.2.(a) Voucher system of control, and (b) Petty cash system of control. Quick Study 8-5 (10 minutes)1.(a) Petty Cash.75.00Cash .75.00 To establish the petty cash fund.(b) Entertainment Expense ($26.50 + $32.17) .58.67Postage Expense. 5.15Printing Expense . 3.00Cash .66.82 To reimburse th

23、e petty cash fund.2.The Petty Cash account is credited when either (1) the dollar amount of the fund is being reduced, or (2) the fund is being eliminated.Quick Study 8-6 (15 minutes) (1)(2)a.(i) Bank(ii) AdditionNo adjustment requiredb.(i) Book(ii) AdditionAdjusting entry requiredc.(i) Book(ii) Sub

24、tractionAdjusting entry requiredd.(i) Book(ii) SubtractionAdjusting entry requirede.(i) Bank(ii) SubtractionNo adjustment requiredf.(i) Book(ii) AdditionAdjusting entry requiredg.(i) Book(ii) SubtractionAdjusting entry requiredMcGraw-Hill Companies, 2009Solutions Manual, Chapter 8489Quick Study 8-7

25、(25 minutes)MADISON COMPANYBank ReconciliationJuly 31, 2009Bank statement balance.$1,800Book balance.$2,025AddAdd Deposit of July 31.210 Interest earned.5 Bank error. 90_2,1002,030DeductDeduct Outstanding checks. 100 Bank service charge. 30Adjusted bank balance.$2,000Adjusted book balance.$2,000Quic

26、k Study 8-8 (15 minutes)Days sales uncollected = x 365 2009 2008 x 365 x 365 25.2 days 26.2 daysInterpretation: The collection of accounts receivable seems to be slightly improving. It took the company one day less to collect on its accounts receivable in 2009 than in 2008.Accounts receivableNet sal

27、es$93,700$1,357,600$90,450$1,259,680Quick Study 8-9A (10 minutes)The documents in a voucher system are:Purchase requisition, Purchase order, Invoice, Receiving report, Invoice approval, and Voucher.Quick Study 8-10B (15 minutes)(a) A Discounts Lost account is employed with the Net Method of recordin

28、g purchases of inventory.(b) The advantage of this method is that the Discounts Lost account highlights for management (on the income statement) the costs incurred by the business that have resulted from the failure to take cash discounts. Management can then determine the reason and possibly correc

29、t the handling of future cash payments to ensure that all favorable purchase discounts are taken.McGraw-Hill Companies, 2009Solutions Manual, Chapter 8491EXERCISESExercise 8-1 (10 minutes)EvaluationThe companys internal control system failed to require separation of asset custody from asset recordke

30、eping.Principles Ignored(1) The recordkeeper should not have been allowed to sign the companys checks.(2) Since a loss was incurred, the company apparently had not bonded its employee. If it had, the bonding company would have insured the loss.If regular, independent reviews of the accounting record

31、s had been done, the payments of salary checks to a nonemployee may have been discovered earlier.Exercise 8-2 (15 minutes)(a) Internal Control Problems(1) A major internal control problem is that the recordkeeper (who has control over the accounting records) has physical control over the cash receip

32、ts. Nothing in the system prevents the recordkeeper from taking cash from the mail and using it personally.(2) The recordkeeper might also delay recording a cash receipt from a customer until more cash comes in at a later date from a second customer. Then, the new cash receipt would be deposited and

33、 recorded as a payment made by the first customer. No entry would be made in the second customers account until cash was received from a third customer, and so on. (This type of fraud is called lapping.)(3) The recordkeeper also could pocket cash and claim that a payment was never received and appar

34、ently lost in the mail. (b)Internal Control Recommendations(1) If only one person is present when the mail is opened, that person may steal cash and claim it was never received. If possible, two people should be present. Otherwise, the honesty and integrity of the person chosen to open the mail is c

35、ritical. One might also consider the use of a P.O. Box for cash receipts by mail as another control procedure.(2) It is important the recordkeeper not have physical control over cash.Exercise 8-3 (15 minutes)1.A cash register (with a locked record) should be used at the sales standit should also be

36、anchored to the stand. If a cash register cannot be used, the total sales value of the sunscreen, shirts, and sunglasses given to the employee each day should be calculated. The employee should sign a receipt for the merchandise and the amount of cash that he or she has been given. At the end of eac

37、h day, the employee should be required to return cash plus remaining sunscreen, shirts, and sunglasses equal to the amount taken to the standpossibly consider one or two return trips if the amounts are large.2.The employee should sign a receipt for the total amount of cash he or she is given each we

38、ekend. Each time the employee makes a purchase, he or she should obtain a signed sales receipt for the payment. The sales receipt should list the items purchased and the prices paid. When the employee returns to the store, the total value of the signed sales receipts plus any remaining cash should e

39、qual the amount of cash originally given to the employee. Also, the merchandise brought back by the employee should be the same as the items listed on the signed sales receipts.McGraw-Hill Companies, 2009Solutions Manual, Chapter 8493Exercise 8-4 (20 minutes) 1.Jan. 1Petty Cash.350 Cash.350 To estab

40、lish a petty cash fund.2.Jan. 8Postage Expense.67Merchandise Inventory*.35Delivery Expense.52Miscellaneous Expenses.56 Cash.210 To reimburse the petty cash fund.* Transportation-in costs are included in Merchandise Inventory under a perpetual system.3.Jan. 8Postage Expense.67Merchandise Inventory .3

41、5Delivery Expense.52Miscellaneous Expenses.56 Cash.210 To reimburse the petty cash fund.*Jan. 8Petty Cash.200 Cash.200 To increase the petty cash fund.* The two January 8 entries can be combined into one entry.Exercise 8-5 (20 minutes) 1.Sept. 9Petty Cash.250 Cash.250 To establish a $250 petty cash

42、fund.2.Sept. 30Merchandise Inventory*.47Postage Expenses.62Miscellaneous Expenses.103Cash Short and Over.4 Cash.216 To reimburse the petty cash fund.* Transportation-in costs are included in Merchandise Inventory under a perpetual system.3. Oct. 1Petty Cash.50 Cash.50 To increase the petty cash fund

43、 to $300.McGraw-Hill Companies, 2009Solutions Manual, Chapter 8495Exercise 8-6 (20 minutes)Bank BalanceBook Balance Not Shown onAddDeductAddDeductAdjustReconciliation1.NSF check from customer returned on Sept. 25 but not recorded by this company.xCr.2.Interest earned on the account.xDr.3.Deposit mad

44、e on September 5 and processed by bank on September 6.x4.Check written by another depositor but charged against this companys account.x5.Bank service charge.xCr.6.Checks outstanding on August 31 that cleared the bank in September.x7.Check written against the company account and cleared by the bank;

45、erroneously not recorded by the company recordkeeper.xCr.8.Principal and interest on a note receivable to this company is collected by the bank but not yet recorded by the company.xDr.9.Checks written and mailed to payees on October 2.x10.Checks written by the company and mailed to payees on Septemb

46、er 30.x11.Deposit made on September 30 after the bank closed.x12.Special bank charge for collection of note in No. 8 on companys behalf.xCr.Exercise 8-7 (10 minutes)1. The voucher system of control establishes procedures for: (a) Verifying, approving, and recording obligations for eventual cash disb

47、ursements, and (b) Issuing checks for payment of verified, approved, and recorded obligations.2. All expenditures should be overseen by a voucher system of control (not only the purchase of merchandise).3. The voucher is initially prepared by the accounting department when it receives the purchase r

48、equisition from the department making the request or when it receives reliable evidence that an obligation has been incurred.Exercise 8-8 (25 minutes)AUSTIN CLINICBank ReconciliationJune 30, 2009Bank statement balance.$15,382Book balance.$15,671AddAdd Deposit of June 30. 2,933 Error on Ck. No. 919.

49、918,31515,680DeductDeduct Outstanding checks. 2,700 Bank service charge. 65Adjusted bank balance.$15,615Adjusted book balance.$15,615Exercise 8-9 (10 minutes)June 30Cash.9 Utilities Expense.9 To correct a journal entry error.30Miscellaneous Expenses.65 Cash.65 To record bank service charge.McGraw-Hi

50、ll Companies, 2009Solutions Manual, Chapter 8497Exercise 8-10 (25 minutes)WALSH COMPANYBank ReconciliationMay 31, 2009Bank statement balance.$6,900Book balance.$7,750Add Deposit of May 31.1,100 Bank error. 2008,200DeductDeduct Outstanding checks.800 Bank service charge.50_ NSF check. 300Adjusted ban

51、k balance.$7,400Adjusted book balance.$7,400Exercise 8-11 (15 minutes)(a)Days sales uncollected on December 31, 2008: x 365 = 35.7 daysDays sales uncollected on December 31, 2009: x 365 = 45.5 days(b)Evaluation: The change from 35.7 to 45.5 days sales uncollected indicates that the receivables have

52、become less liquid. While the accounts receivable were, on average, collected in just over one month at the end of 2008, this has increased by almost 10 days in Year 2009. The company needs to follow up to identify the reasons for this change.Exercise 8-12A (10 minutes)1.E3.A5.D2.C4.F6.B$65,000$664,

53、000$93,000$746,000Exercise 8-13B (25 minutes)a.Recording inventory at gross amountsOct. 2Merchandise Inventory.5,600 Accounts Payable.5,600 To record merchandise purchases.10Accounts Payable.900 Merchandise Inventory .900 To record credit memo for returns.17Merchandise Inventory.5,950 Accounts Payab

54、le.5,950 To record merchandise purchases.26Accounts Payable.5,950 Merchandise Inventory*.119 Cash .5,831To record payment for merchandise less the discount. *($5,950 x .02)31Accounts Payable.4,700 Cash .4,700To record payment for merchandise less the returns ($5,600 - $900).McGraw-Hill Companies, 20

55、09Solutions Manual, Chapter 8499Exercise 8-13B (Concluded)b.Recording inventory at net amountsOct. 2Merchandise Inventory.5,544 Accounts Payable.5,544 To record merchandise purchases less discount $5,600 - ($5,600 x .01) = $5,544.10Accounts Payable.891 Merchandise Inventory.891 To record credit memo

56、 for returns $900 - ($900 x .01). *13Discounts Lost.47 Accounts Payable.47 To record the discount lost ($5,600 - $900) x.01.17Merchandise Inventory.5,831 Accounts Payable.5,831 To record merchandise purchases less discount $5,950 - ($5,950 x .02) = $5,831.26Accounts Payable.5,831 Cash .5,831 To reco

57、rd payment for merchandise.31Accounts Payable.4,700 Cash .4,700 To record payment for merchandise less returns ($5,544 - $891 + $47).* This entry could alternatively be recorded on October 31 when the cash payment is made (this is likely since the invoice was filed incorrectly).PROBLEM SET AProblem

58、8-1A (20 minutes)1. Violates separation of duties. The company should implement a policy whereby the person recording incoming cash receipts is not responsible for posting the payments to the customer accounts.2. Violates the principle of establishing responsibility. Only Jenn should have access to

59、the petty cash fund since she is the custodian. The company should implement a policy of not allowing petty cash transactions over the lunch hour. Alternatively, Kirsten could also serve as a petty cash custodian with her own petty cash fund.3. Violates the proper application of technological contro

60、ls. While the daily backup is a very good internal control, the tape needs to be taken off the premises every night. If the building and computer are destroyed, the data then can be restored from the tape since it is safely kept off the premises. The company should implement a policy of storing tape