Chapter 7: Q16RQ (page 412)
List some examples of timing differences, and for each difference, determine if it would affect the book side of the reconciliation or the bank side of the reconciliation.
Examples of bank reconciliation statements are check deposits, EFT payments, and cash deposits.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Recording credit card and debit card sales
Restaurants do a large volume of business with credit and debit cards. Suppose Summer,
Sand, and Castles Resort restaurant had these transactions on January 28, 2018:
National Express credit card sales $ 10,800
ValueCard debit card sales 10,000
Requirements
1. Suppose Summer, Sand, and Castles Resort’s processor charges a 2% fee anddeposits sales net of the fee. Journalize these sales transactions for the restaurant.
2. Suppose Summer, Sand, and Castles Resort’s processor charges a 2% fee anddeposits sales using the gross method. Journalize these sales transactions for therestaurant.
What are some common controls used with a bank account?
Identifying internal control weakness in cash receipts
Pendley Productions makes all sales on credit. Cash receipts arrive by mail. Larry
Chipello, the mailroom clerk, opens envelopes and separates the checks from the
accompanying remittance advices. Chipello forwards the checks to another employee,
who makes the daily bank deposit but has no access to the accounting records.
Chipello sends the remittance advices, which show cash received, to the accounting
department for entry in the accounts. Chipello’s only other duty is to grant sales
allowances to customers. (A sales allowancedecreases the customer’s account receivable.)
When Chipello receives a customer check for \(575 less a \)45 allowance, he records the
sales allowance and forwards the document to the accounting department.
Requirements
1. Identify the internal control weakness in this situation.
2. Who should record sales allowances?
3. What is the amount that should be shown in the ledger for cash receipts?
Phoenix Restaurants accepts credit and debit cards as forms of payment. Assume Phoenix had $12,000 of credit and debit card
sales on June 30, 2017.
9. Suppose Phoenix’s processor charges a 2% fee and deposits sales net of the fee. Journalize the sale transaction for the
restaurant.
10. Suppose Phoenix’s processor charges a 2% fee and deposits sales using the gross method. Journalize the sale transaction for
the restaurant.
What are some limitations of internal controls?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
