You are the manager of the
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Chapter 10 Solutions
College Accounting (Book Only): A Career Approach
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Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Financial Accounting
Financial Accounting: Tools for Business Decision Making, 8th Edition
Managerial Accounting (4th Edition)
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- Able, an accounts payable supervisor for ABC Company, bought supplies for a company he owned on the side. Able entered vouchers in ABC Company’s accounts payable system for the cost of the supplies. Checks were cut to pay for these unauthorized expenses during normal daily check runs. The goods ordered were drop-shipped to a location where Able could collect them. This is an example of: a. An expense reimbursement scheme b. A commission scheme c. A billing scheme d. An invoice kickback schemearrow_forwardYou are the auditor for Office Supply, which is opening a new location next week. The store manager has established all the controls you recommended for ensuring that sales are recorded properly, and cash is accounted for. The manager has heard from other locations that employees often used returned goods as a means of skimming money from the register. Choose one of the following questions to discuss: How might an employee use returned goods to skim money from the register? What controls would you recommend to prevent or detect fraudulent returns? What audit procedures might you perform to detect fraudulent returns?arrow_forwarda) Should every company switch from the traditional three-way matching process (purchase orders, receiving reports, and supplier invoices) to the two- way match (purchase orders and receiving reports) used in evaluated receipt settlement (ERS)? Why, or why not? b) Imagine you had just started an internship and you visited your first client who gave you the following list some they do: 1. Cancellation of the voucher package by the cashier once checks are signed. 2. Prenumbering and periodically accounting for all internal source documents 3. Tokenization 4. Periodic physical count of inventory 5. Mailing Monthly Statements 6. Reconciliation of invoices with packing lists and sales order 7. Performing data integrity controls 8. Using requests for proposals to solicit competitive bids for capital assets 9. Using a planned production schedule 10. Use biometric authentication Required Choose five of the activities and (1) Identify which business cycle(s) the activity is mostly associated…arrow_forward
- After invoicing a regular customer, PaintPros realizes that it billed the customer for prep work that was supposed to be free per the estimate. How should a credit memo be created for this customer? Select an answer: Apply the credit memo to the overbilled invoice and send the customer a check. Apply the credit memo to any open invoice by selecting Receive Payment. Apply the credit memo to the customer's most recent payment and send the customer a refund.arrow_forwardAbbe Co. is a small merchandising company with a manual accounting system. An investigation revealed that in spite of a sufficient bank balance, a significant amount of available cash discounts had been lost because of failure to make timely payments. In addition, it was discovered that the invoices for several purchases had been paid twice. Outline procedures for the payment of vendors’ invoices so that the possibilities of losing available cash discounts and of paying an invoice a second time will be minimized.arrow_forwardWhen you pay for goods at La Tienda Foods, the cash register displays the amount of the sale, the cash received, and any change returned to you. Suppose the register also produces a customer receipt but keeps no record of the sales transactions. At the end of the day, the clerk counts the cash in the cash register and gives it to the cashier for deposit in the company bank account. Required Complete the memo to Mia Francesca, the owner. Identify the internal control weakness over cash receipts, and explain how the weakness gives an employee the opportunity to steal cash. State how to prevent such a theft TO: Mia Francesca keep a record of With no record of There is a weakness in internal control over cash receipts from customers. The cash registers cash register, there is no way to determine how much cash should be in the cash drawer. This omission makes it easy for the cashier to improve the internal control over cash, the company should use cash registers that lock a record of each…arrow_forward
- As the accountant for Pure-Air Distributing, you attend a sales managers’ meeting devoted to a discussion of credit policies. At the meeting, you report that bad debts expense is estimated to be $59,000 and accounts receivable at year-end amount to $1,750,000 less a $43,000 allowance for doubtful accounts. Sid Omar, a sales manager, expresses confusion over why bad debts expense and the allowance for doubtful accounts are different amounts. Write a one-page memorandum to him explaining why a difference in bad debts expense and the allowance for doubtful accounts is not unusual. The company estimates bad debts expense as 2% of sales.arrow_forwardThe sales department receives the unstandardised sales order since customer orders are mailed, e-mailed or faxed to the sales department. The sales clerk first converts the unstandardised sales order into the standardised sales order. For this purpose, the sales representative requests the missing information, if any. When the order is received, the sales clerk checks the customer’s creditworthiness of the customer from his computer terminal. Three years ago, the sales clerk requested the accounting department to provide him with a list of customers whose account receivables are written off. The sales clerk is still using this information to check the creditworthiness of the customers. The sales clerk is using the same procedure to check the creditworthiness of the new customers.The customer’s order is rejected if the customer’s credit is not verified. The sales order processing is started after the credit verification. In particular, the sales clerk records the approved standardised…arrow_forwardThe sales department receives the unstandardised sales order since customer orders are mailed, e-mailed or faxed to the sales department. The sales clerk first converts the unstandardised sales order into the standardised sales order. For this purpose, the sales representative requests the missing information, if any. When the order is received, the sales clerk checks the customer’s creditworthiness of the customer from his computer terminal. Three years ago, the sales clerk requested the accounting department to provide him with a list of customers whose account receivables are written off. The sales clerk is still using this information to check the creditworthiness of the customers. The sales clerk is using the same procedure to check the creditworthiness of the new customers.The customer’s order is rejected if the customer’s credit is not verified. The sales order processing is started after the credit verification. In particular, the sales clerk records the approved standardised…arrow_forward
- On January 31, Jema hardware received a check from a customer for payment of an invoice. The 6,000 invoice was dated May 22, and included credit terms of 1/10, n/45. On January 25, the customer returned P600 of the merchandise because it was defective. How would this transaction be recorded in Jema's cash receipts journal?arrow_forwardJanet works in the credit department handling accounts receivable transactions. At the end of each period, the allowance for uncollectible accounts has a larger and larger debit balance. What may be going wrong here? What possible corrections should be made?arrow_forwardWhen the store manager receives a requisition note, he issues three copies of purchase order. Two copies of these orders are sent to the vendor and one copy remains in the stores file. When the goods are received, the store manager matches the purchase order with the invoice and forwards them to accounts payable department for payment of dues. Which of the following statement best describes the internal control over the purchasing process? Inadequate control over accounts payable. Inadequate segregation of duties. Inadequate segregation of duties. Adequate internal control exists.arrow_forward
- College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub