Question

In: Accounting

A company wants to implement good internal control. What are the policies and procedures you can suggest to minimize human frauds and errors?

 

ACC101

Q1-

A company wants to implement good internal control. What are the policies and procedures you can suggest to minimize human frauds and errors? (1Mark)

Q2-

Assume that you have a company. And the management team estimates that 3% of sales will be uncollectible.

Give any amount of sales and prepare the journal entry using the percent of sales method.                                                                                              (1Mark)

Q3-

A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory.

January 1:

Purchased 30 units at SAR11 per unit

February 5:

Purchased 30 units at SAR 13 per unit

March 16:

Sold 50 Units for SAR 15 per unit

A.Prepare general journal entries to record the March 16 sale using the

  1. FIFO inventory valuation method.
  2. LIFO inventory valuation method.
  3. Weighted average valuation method.

B. What is the cost of goods sold and the gross margin for each method? (2Marks)

Q4. What is the bank reconciliation? why is it important for companies to prepare bank reconciliation periodically?                                                                (1Mark)

Solutions

Expert Solution

1Q It is a type of internal arrangement or internal audit conducted to improve operational efficiency and accuracy of the financial records,helps to protect investors from fraud

Policies and procedures

@ conduct surprise visit and investigation

@use and install proper computer security measures

@undertake strict supervision for cash receipts

@seperate payment and receipt department

@proper evaluation and monitoring

2Q. Assume your business generate credit sales of$ 20,000 $ 15,000 $10,000 for past 3 years then add these figures =$45000

Add uncollected credit sales amount that is 3%of credit sales=$ 600, $450 $300 add it=1350

Divide uncollected credit sales/Total credit sales

1350/45000*100=3%

Journal entry for above transaction

Un collectible exp a/c. Dr. 1350

To Allowance for doubtful a/c. 1350

3. Under FIFo method valuation of CGS and stock

Jan/1 purchase 30unit @SAR11=330

Feb5 purchase 30unit@SAR13=390

Inventory balance=720

March 16 sale50*SAR15=750

CGS=30*11=330

20*13=260

=590CGS

Balance=720-590=130

LIFO method

30units purchased for SAR11=330

30units purchased for SAR13=390

Total=720

March 16 sales50*SAR13=750

CGS=(30*13=390)+(20*11=220,)=610

Balance=720-610=110

WAC method

=Cost of goods available for sales/units available for sales

330+390/30+30

720/60=12

COGS 12*50=600

Balance=720-600=120

4Q . Bank reconciliation statement is the summary of banking and business activity.It shows deposit,withdrawals and other activity

Importance

Compare internal records with actual statements

Helps in bookkeeping

Comfortable for general ledger preparetion


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A company wants to implement good internal control. What are the policies and procedures you can suggest to minimize human frauds and errors?   
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Q1- A company wants to implement good internal control. What are the policies and procedures you can suggest to minimize human frauds and errors? Q2- Assume that you have a company. And the management team estimates that 3% of sales will be uncollectible. Give any amount of sales and prepare the journal entry using the percent of sales method. Q3- A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory....
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Q1- A company wants to implement good internal control. What are the policies and procedures you can suggest to minimize human frauds and errors?
Q1- A company wants to implement good internal control. What are the policies and procedures you...
Q1- A company wants to implement good internal control. What are the policies and procedures you can suggest to minimize human frauds and errors? (1Mark) Q2- Assume that you have a company. And the management team estimates that 3% of sales will be uncollectible. Give any amount of sales and prepare the journal entry using the percent of sales method. (1Mark) Q3- A company that uses a perpetual inventory system made the following cash purchases and sales. There was no...
Q1- A company wants to implement good internal control. What are the policies and procedures you...
Q1- A company wants to implement good internal control. What are the policies and procedures you can suggest to minimize human frauds and errors? (1Mark) Q2- Assume that you have a company. And the management team estimates that 3% of sales will be uncollectible. Give any amount of sales and prepare the journal entry using the percent of sales method. (1Mark) Q3- A company that uses a perpetual inventory system made the following cash purchases and sales. There was no...
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