Question 1 - Listed below are five procedures followed by Collins Company.
1. Employees are required to take vacations.
2. Any member of the sales department can approve credit sales.
3. Jethro Bodine ships goods to customers, bills customers, and receives payment from customers.
4. Total cash receipts are compared to bank deposits daily by someone who has no other cash responsibilities.
5. Time clocks are used for recording time worked by employees.
Instructions - Indicate whether each procedure is an example of good internal control or of weak internal con¬trol. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated.
Question 2 - James Hughes Company established a petty cash fund on May 1, cashing a check for $100. The company reimbursed the fund on June 1 and July 1 with the following results.
June 1: Cash in fund $2.75. Receipts: delivery expense $31.25; postage expense $39.00; and miscellaneous expense $25.00.
July 1: Cash in fund $3.25. Receipts: delivery expense $21.00; entertainment expense $51.00; and miscellaneous expense $24.75. On July 10, James Hughes increased the fund from $100 to $150.
Instructions - Prepare journal entries for James Hughes Company for May 1, June 1, July 1, and July 10.
Question 3 - Lincolnville Company uses an imprest petty cash system. The fund was established on March 1 with a balance of $100. During March the following petty cash receipts were found in the petty cash box.
|
Date
|
Receipt No.
|
For
|
Amount
|
|
3/5
|
1
|
Stamp Inventory
|
$39
|
|
7
|
2
|
Freight-out
|
21
|
|
9
|
3
|
Miscellaneous Expense
|
6
|
|
11
|
4
|
Travel Expense
|
24
|
|
14
|
5
|
Miscellaneous Expense
|
5
|
The fund was replenished on March 15 when the fund contained $3 in cash. On March 20, the amount in the fund was increased to $150.
Instructions - Journalize the entries in March 1 to the operation of the oettv cash fund.