Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
6th Edition
ISBN: 9780134486857
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter D, Problem 1DC
Lance Berkman is the controller of Saturn, a dance club whose year-end is December 31. Berkman prepares checks for suppliers in December, makes the proper
Requirements
- 1. What financial ratio(s) is(are) most affected by the action to hold onto the checks until January?
- 2. What is Berkman’s purpose in undertaking this activity?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Weyman Z. Wannamaker is the chief financial officer of Cogburn Company. He prides himself on being able to manage the company’s cash resources to minimize the interest expense. Consequently, on the second business day of each month, Weyman pays down or draws cash on Cogburn’s revolving line of credit at First National Bank in accordance with his cash requirements forecast.You are the auditor. You find the information on this line of credit in the following table. You inquired at First National Bank and learned that Cogburn Company’s loan agreement specifies payment on the first day of each month for the interest due on the previous month’s outstanding balance at the rate of “prime plus 1.5 per cent.” The bank gave you a report that showed the prime rate of interest was 8.5 per cent for the first six months of the year and 8.0 per cent for the last six months.
Check the following image for payable balances
Required:a. Prepare an audit estimate of the amount of interest expense you…
You are the auditor for Lambda Ltd, a sportswear company. The following is an excerpt from an interview between you and the sales ledger clerk, Sandy.
Auditor: What are the controls over the cash receipts your company receives?Sandy: Good. The receptionist opens the mail each day and makes sure each cheque is crossed. She then gives me all the cheques to post against the sales ledger.Auditor: What happens then?Sandy: I make a list of all the cheques received – for control purposes. Then I record each cheque against each customer’s record on the sales ledger. After the cheques have accumulated for a couple of days, I give them to the receptionist to bank. The receptionist keeps all the bank-in slips as a record in case there are any queries later.Auditor: Are there ever any difficulties between the cheque value and the associated invoice?Sandy: Sometimes there are. Usually it relates to a special discount that has been authorised by me or the sales manager. If the differences are not…
Janice Dodds opens the mail for the Ajax Plumbing Company. She lists all customer checks on a spreadsheetthat includes the name of the customer and the check amount. The checks, along with the spreadsheet, are thensent to Jim Seymour in the accounting department who records the checks and deposits them daily in the company’s checking account. How could the company improve its internal control procedure for the handling of itscash receipts?
Chapter D Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Ch. D - Prob. 1TICh. D - Prob. 2TICh. D - Prob. 3TICh. D - Prob. 4TICh. D - Prob. 5TICh. D - Prob. 6TICh. D - Prob. 7TICh. D - Prob. 8TICh. D - Prob. 9TICh. D - Prob. 10TI
Ch. D - Prob. 1QCCh. D - Prob. 2QCCh. D - Vertical analysis of Libertys balance sheet for...Ch. D - Prob. 4QCCh. D - Libertys inventory turnover during 2019 was...Ch. D - Prob. 6QCCh. D - Prob. 7QCCh. D - Prob. 8QCCh. D - Prob. 9QCCh. D - Prob. 10QCCh. D - Prob. 1RQCh. D - Prob. 2RQCh. D - Prob. 3RQCh. D - Prob. 4RQCh. D - Prob. 5RQCh. D - Prob. 6RQCh. D - Prob. 7RQCh. D - Prob. 8RQCh. D - Prob. 9RQCh. D - Prob. 10RQCh. D - Prob. 11RQCh. D - Prob. 12RQCh. D - Prob. 13RQCh. D - Prob. 1SECh. D - Verifine Corp. reported the following on its...Ch. D - Prob. 3SECh. D - Prob. 4SECh. D - Prob. 5SECh. D - Prob. 6SECh. D - Prob. 7SECh. D - Accels Companies, a home improvement store chain,...Ch. D - Prob. 9SECh. D - Prob. 10SECh. D - Prob. 11SECh. D - Prob. 12SECh. D - Prob. 13ECh. D - Prob. 14ECh. D - Prob. 15ECh. D - Refer to the data presented for Mulberry Designs,...Ch. D - Prob. 17ECh. D - Prob. 18ECh. D - Prob. 19ECh. D - Micatin, Inc.s comparative income statement...Ch. D - Prob. 21ECh. D - Prob. 22ECh. D - Prob. 23APCh. D - Prob. 24APCh. D - Prob. 25APCh. D - Prob. 26APCh. D - Comparative financial statement data of Sanfield,...Ch. D - Prob. 28APCh. D - Prob. 29APCh. D - Prob. 30BPCh. D - Prob. 31BPCh. D - Prob. 32BPCh. D - Prob. 33BPCh. D - Prob. 34BPCh. D - Prob. 35BPCh. D - In its annual report, XYZ Athletic Supply, Inc....Ch. D - Prob. 38PCh. D - Lance Berkman is the controller of Saturn, a dance...Ch. D - Prob. 1EICh. D - Prob. 1FSC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The vice president of finance asks the accounts payable (AP) clerk to write a check in the name of the president for $10,000. He and the president will sign the check (two signatures needed on a check of this size). He further instructs the AP clerk not to disclose this check to her immediate supervisor. What should the AP clerk do? Should she prepare the check? Should she inform her immediate supervisor? Discuss with internal controls in mind.arrow_forwardYour client is preparing financial statements to show the bank. You know that he has incurred a refrigeration repair expense during the month, but you see no such expense on the books. When you question the client, he tells you that he has not yet paid the 1,255 bill. Your client is on the accrual basis of accounting. He does not want the refrigeration repair expense on the books as of the end of the month because he wants his profits to look good for the bank. Is your client behaving ethically by suggesting that the refrigeration repair expense not be booked until the 1,255 is paid? Are you behaving ethically if you agree to the clients request? What principle is involved here?arrow_forwardPlease see attached.arrow_forward
- You 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_forwardBlake Hudnall is Conosis Incorporated's payroll accountant. During a casual conversation with coworkers, Blake learns that Teagan Vinkovic, a coworker, is deliberately overstating the number of hours worked during each pay period because of a personal economic situation. Required: Which ethical guidelines pertain to this situation? What should Blake do with this knowledge? Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect. Encourage the employee to continue taking care of family needs as they have been Professional competence and due care in the proper preparation of the payroll and verify externally with the supervisor or manager the actual hours worked ? Professionalism to the company and ensuring that there is honest and true…arrow_forwardYou are the assistant controller in charge of general ledger accounting at Linebarger Bottling Company. Your company has a large loan from an insurance company. The loan agreement requires that the company's cash account balance be maintained at $200,000 or more, as reported monthly. On June 30, the cash balance is $80,000, which you report to Lisa Infante, the financial vice president. Lisa excitedly instructs you to keep the cash receipts book open for one additional day for purposes of the June 30 report to the insurance company. Lisa says, “If we don't get that cash balance over $200,000, we'll default on our loan agreement. They could close us down, put us all out of our jobs!” Lisa continues, “I talked to Oconto Distributors (one of Linbarger's largest customers) this morning. They said they sent us a check for $150,000 yesterday. We should receive it tomorrow. If we include just that one check in our cash balance, we'll be in the clear. It's in the mail!” a. Who will suffer…arrow_forward
- The internal control procedures in Philips Company make the following provisions. Identify the principles of internal control that are being followed in each case. Employees who have physical custody of assets do not have access to the accounting records. Each month the assets on hand are compared to the accounting records by an internal auditor. A prenumbered shipping document is prepared for each shipment of goods to customers. All over-the-counter receipts are registered on cash registers. All cashier are bonded. Daily cash counts are made by Cashier department supervisors. The Duties of receiving cash, recording cash, and having custody of cash are assigned to different individuals. Only Cashier may operate cash registers. Company checks are prenumbered. The bank statement is reconciled monthly by an internal auditor. Blank checks are stored in a safe in the treasurer’s office. Only the treasurer or assistant treasurer may sign checks. Checks signers are not allowed to record cash…arrow_forwardCornick, Inc. sells office products to businesses in the eastern region of the United States. Each month, the IT division at Cornick prints monthly statements and sends them to the accounts receivable (AR) department, where a clerk mails them to the customers. Cornick’s customers mail their payments back to Cornick, where a clerk in AR batches the checks and sends them to the cashier. The AR clerk then uses the payment stub to enter the payments into the computer, where the AR master data are updated to record the payment. create the Table of Entities and Activities.arrow_forwardFor each of the following situations, indicate which internal con ucedure Johnson Company has violated: 1. Since they are costly, background chec. are not done for the employees. Purchases of items on credit do not need the approval of the purchasing 2. department. All hard copies of documents are shredded after one month and electronic records 3. are deleted after two months. 4. The company does not prepare operating or cash budgets. The accountant receives the checks from customers in payment of amounts due 5. and records the cash receipts. 6. There are no locks in the area where inventory is stored. The hiring, firing and pay adjustments are made by the foremen in the 7. manufacturing area.arrow_forward
- On November 9, Jane Jones writes a check for $5,000 payable to Ralph Rodgers in payment for goods to be received later in the month. Before the close of business on November 9, Jane notifies the bank by telephone to stop payment on the check. On December 19, Ralph gives the check to Bill Briggs for value and without notice. On December 20, Bill deposits the check in his account at Bank A. On December 21, Bank A sends the check to its correspondent, Bank B. On December 22, Bank B presents the check through the clearinghouse to Bank C. On December 23, Bank C presents the check to Bank P, the payor bank. On December 28, the payor bank makes payment of the check final. Is Jane Jones’s stop payment order effective against the payor bank? Explain.arrow_forwardJacqueline Mensah, manager of Expert Building Company, is a valued and trusted employee. She has been with the company from its start two years ago. Because of the demand of her job, he has not taken a vacation since she began working. She is in charge of recording collections on account, making the daily bank deposits, and reconciling the bank statement. Late last year, clients began complaining to you, the Managing Director, about incorrect statements. As Managing Director, you want to investigate this matter. Jacqueline tells you there is nothing to worry about. The problem is due to the slow mail: customers payments and statement are crossing in the mail. Because clients were not complaining last year, you doubt the mail is the primary reason for the problem. Required: What might be some of the reasons for the delay? What should be done to make sure the problems are avoided in the future?arrow_forwardMalcolm is a teller at a credit union, where he has just processed a transaction that he believes is related to monehy laundering. In this situation, Malcolm's first step should be to: A. Place a hold on all of the accounts held by the person who requested the transaction B. alert the designated authority as soon as possible C. complete all sections of the STR form to the best of his ability D. notify the nominated officer as soon as possiblearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY