ACC290 Week5 Version 2 WileyPLUS

ACC290 Week5 Version 2 WileyPLUS 

BE5–1
BE5–2
BE6-5
BE6-7
BE7-4
BE7-6

BE5-1 Presented here are the components in Pedersen Company’s income statement. Determine the missing amounts.  

Cost of             Gross              Operating         Net Sales          Income

Goods Sold      Profit               Expenses                                

$ 71,200          (b)                    $ 30,000          (d)                    $10,800
$108,000         $70,000           (c)                    (e)                    $29,500
(a)                    $71,900           $109,600         $46,200                      (f )

BE5-2 Prior Company buys merchandise on account from Wood Company. The selling price of the goods is $900 and the cost of the goods sold is $630. Both companies use perpetual inventory systems.  Journalize the transactions on the books of both companies

BE6-5 In its first month of operation, Maze Company purchased 100 units of inventory for $6, then 200 units for $7, and finally 150 units for $8. At the end of the month, 180 units remained. Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO. Explain why this amount is referred to as phantom profit. The company uses the periodic method.

BE6-7 O’Connor Video Center accumulates the following cost and market data at December 31. Inventory                          Cost Data         Market Data

Categories                               

Cameras                       $12,500                       $13,400

Camcorders                 9,000               9,500 

DVDs                          13,000                         12,800

Compute the lower-of-cost-or-market valuation for O’Connor’s inventory.

BE7-5 While examining cash receipts information, the accounting department determined the following information: opening cash balance $150, cash on hand $1,125.74, and cash sales per register tape $990.83. Prepare the required journal entry based upon the cash count sheet

BE7-6 Newell Company has the following internal control procedures over cash disbursements. Match the internal control principle that is applicable to each procedure.

Segregation of duties

Establishment of responsibility

Physical controls

Independent internal verification

Documentation procedures

1. Only the treasurer or assistant treasurer may sign checks.

2. Company checks are pre-numbered.

3. Check signers are not allowed to record cash disbursement transactions.

4. The bank statement is reconciled monthly by an internal auditor.

5. Blank checks are stored in a safe in the treasurer's office.

BE7-4 Beaty Company has the following internal control procedures over cash receipts. Identify the internal control principle that is applicable to each procedure.

(a) All over-the-counter receipts are registered on cash registers.

(b) All cashiers are bonded.

(c) Daily cash counts are made by cashier department supervisors.

(d) The duties of receiving cash, recording cash, and having custody of cash are assigned to different individuals.

(e) Only cashiers may operate cash registers.