Question

In: Accounting

a) Compare the periodic versus the perpetual system as a control device. b) What sort of organisations are likely to use the periodic inventory system?

2. a) Compare the periodic versus the perpetual system as a control device. b) What sort of organisations are likely to use the periodic inventory system? What kind of organisations will prefer to use perpetual inventory system? c) If management overstated the valuation of inventory, would it affect profit for the year?

3. Perform a bank reconciliation. a) Reconcile Jack Steel’s month end cash balance as of 31 Jul 2019 b) Based on your analysis, propose adjusting entries (if any). Transactions and balances: • 31 Jul 2019 Bank Statement balance $ 58,791 • 31 Jul 2019 balance per Jack’s records $ 57,371 • Jack received a payment that he has not deposited $ 250 • Jack issued a cheque payable to Pandora’s Jewels to pay for a belated Mother’s Day gift to his grandmother that has not been presented to the bank $ 1,612 • Bank charges for the month of July were $40 • Interest on bank balance credited to Jack’s account $ 98

Expert Solution

Question 2

as a Control device

The Periodic Inventory control system is counting on regualr interval( As per Company Policy )for the physical count and accounted in books at the year end.

and varifying the same in the books of accounts.

Whereas in Perpetual Inventory system is counting on reglar basis and recording balance

Continously.

Organsiation Choice of method

Periodic Inventroy shall be used by Corporates with Low Sale volume and can keep record on the same manually .

Perpetual shall be followed by the organsiation with high Sale volume to determien the balance as on hand.

Overstamenet of Valuation of Inventroy

Overstamenet of Valuation of Inventroy will lead to increase the profit.

Question 3

Balance as per Bnak Statement

58791

Add:

Cash received not deposited

250

Less:

Cheque not yet presented

1612

Balance as per Cah Book

57429

Balance as per Cash Book

57371

Add:

Interest Amount

98

Less:

Bank Charges

40

Balance as per Bank Acount

57429

Here Interest charges and Bank Charges are not given impact again in bank book because they are already treated with the same, hence only changed in cash Book

Secondly, Cheques Not yet presented has been already dealt with the Cash Book so effect only counted in Bank book

Thirdly, Cash received not deposited impact of the same already taken into Cash , hence added into Bank Account.

ekkarill92 answered 2 years ago

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