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1. Internal control procedures include A) Procedures to

Resolved Question:

1. Internal control procedures include:
A) Procedures to ensure reliable financial reports.
B) Safeguards to protect company assets.
C) Policies to direct operations toward common goals.
D) Methods to achieve compliance with laws and regulation.
E) All of the above.

2. The special journals of many accounting systems include the:
A) Sales journal.
B) Purchases journal.
C) Cash receipts journal.
D) Cash disbursements journal.
E) All of the above.

3. The sales journal is used for recording:
A) Credit purchases.
B) Credit sales.
C) Cash sales.
D) Cash purchases.
E) Cash receipts.

4. The Accounts Payable account in the general ledger is:
A) A controlling account for the subsidiary accounts payable ledger.
B) The account that controls the purchases journal.
C) The subsidiary account to the purchases journal.
D) Part of a special journal.
E) Part of a subsidiary ledger.

5. An internal control system consists of the policies and procedures managers use to :
A) Protect assets.
B) Ensure reliable accounting.
C) Promote efficient operations.
D) Urge adherence to company policies.
E) All of the above.

6. A company's internal control system:
A) Eliminates the risk of loss.
B) Monitors and controls business activities.
C) Eliminates human error.
D) Eliminates the need for audits.
E) All of the above.

7. Cash equivalents:
A) Are readily convertible to a known cash amount.
B) Include short-term investments purchased within 3 months of their maturity dates.
C) Have a market value that is not sensitive to interest rate changes.
D) Include U. S. treasury bills.
E) All of the above.

8. Credit card expense may be classified as:
A) A "discount" deducted from sales to get net sales.
B) A selling expense.
C) An administrative expense.
D) All of the above.
E) Only a and b.

9. The materiality principle:
A) States that an amount can be ignored if its effect on financial statements is unimportant to user's business decisions.
B) Requires use of the allowance method for bad debts.
C) Requires use of the direct write-off method.
D) States that bad debts not be written off.
E) Requires that expenses be reported in the same period as the sales they helped produce.

10. Electron borrowed $75,000 cash from TechCom by signing a promissory note. TechCom's entry to record the transaction should include a:
A) Debit to Notes Receivable for $75,000.
B) Debit to Accounts Receivable for $75,000.
C) Credit to Notes Receivable for $75,000.
D) Debit Notes Payable for $75,000.
E) Credit to Sales for $75,000.

Problem #1 ( 30 points )
Renton Co. uses special journals to record its transactions. They use the perpetual inventory system. Shown below are the purchasing and cash disbursement transactions for current month of May:

Record these transactions in the following journals.

Problem #2 ( 25 points )
Brown Company's bank statement for September 30 showed a cash balance of $1,350. The company's Cash account in its general ledger showed a $995 debit balance. The following information was also available as of September 30.

a. A customer's check for $100 marked NSF was returned to Brown Company by the bank. In addition, the bank charged the company's account a $25 processing fee.
b. The September 30 cash receipts, $1,250, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the September 30 bank statement.
c. A $15 debit memorandum for checks printed by the September 30 bank was included with the canceled checks.
d. Outstanding checks amounted to $1,145.
e. A customer's note for $900 was collected by the bank. A collection fee of $25 was deducted by the bank and the difference was deposited in the account.
f. Included with the canceled checks was a check for $275, drawn on another company, Browne Inc.

(a) Prepare a bank reconciliation as of September 30.
(b) Prepare any necessary adjusting journal entries necessary as a result of the bank reconciliation.

Use the following to answer the following problem

On December 31, of the current year, a company's unadjusted trial balance revealed the following: Accounts receivable of $185,600; Sales Revenue of $1,280,000; (75% were on credit), and Allowance for Doubtful Accounts of $1,600 (credit balance).

Problem #3 ( 25 points )
Prepare the adjusting journal entry to record the estimate for bad debts assuming:
1. 6% of the accounts receivable balance is assumed to be uncollectible.
2. Bad debts expense is estimated to be 1.5% of credit sales.
Submitted: 7 years ago.
Category: Homework
Expert:  Neo replied 7 years ago.

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