You are on page 1of 3

P3-1A On April 1 Flint Hills Travel Agency Inc. was established.

These transactions were completed during the month

y y y y y y

y y y y

1. Stockholders invested $25,000 cash in the company in exchange for common stock. 2. Paid $900 cash for April office rent. 3. Purchased office equipment for $2,800 cash. 4. Purchased $200 of advertising in the Chicago Tribune, on account. 5. Paid $500 cash for office supplies. 6. Earned $10,000 for services provided: Cash of $1,000 is received from customers, and the balance of $9,000 is billed to customers on account. 7. Paid $400 cash dividends. 8. Paid Chicago Tribune amount due in transaction (4). 9. Paid employees salaries $1,200. 10. Received $9,000 in cash from customers billed previously in transaction (6).

(a) Cash Ret. Earnings


$29,000 $ 7,300

(a) Prepare a tabular analysis of the transactions using these column headings: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, and Retained Earnings (with separate columns for Revenues, Expenses, and Dividends). Include margin explanations for any changes in Retained Earnings. (b) From an analysis of the Retained Earnings columns, compute the net income or net loss for April.


The following control procedures are used in Falk Company for over-the-counter cash receipts.

1. Cashiers are experienced; thus, they are not bonded.

2. All over-the-counter receipts are registered by three clerks who share a cash register with a single cash drawer. 3. To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attach case in the stock room until it is deposited in the bank. 4. At the end of each day the total receipts are counted by the cashier on duty and reconciled to the cash register total. 5. The company accountant makes the bank deposit and then records the days receipts. (a) For each procedure, explain the weakness in internal control and identify the control principle that is violated. (b) For each weakness, suggest a change in the procedure that will result in good internal control.

P4-3A On July 31, 2010, Fenton Company had a cash balance per books of $6,140. The statement from Jackson State Bank on that date showed a balance of $7,695.80. A comparison of the bank statement with the cash account revealed the following facts. 1. The bank service charge for July was $25. y 2. The bank collected a note receivable of $1,500 for Fenton Company on July 15, plus $30 of interest. The bank made a $10 charge for the collection. Fenton has not accrued any interest on the note. y 3. The July 31 receipts of $1,193.30 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31. y 4. Company check No. 2480 issued to H. Coby, a creditor, for $384 that cleared the bank in July was incorrectly entered in the cash payments journal on July 10 for $348. y 5. Checks outstanding on July 31 totaled $1,980.10. y 6. On July 31 the bank statement showed an NSF charge of $690 for a check received by the company from P. Figura, a customer, on account. Instructions
y y y

(a) Prepare the bank reconciliation as of July 31. (b) Prepare the necessary adjusting entries at July 31. $6,909.00

(a) Cash bal.

Essentials of Accounting Fourth Edition Select Material From: Financial Accounting Fifth Edition Kimmel Weygandt Kieso and Managerial Accounting Fourth Edition Weygandt Kimmel Kieso