Thomas King

ACC 290
Exercise 3
University Of Phoenix

BE-5-1
Presented here are the components in Korinek Companys income statement.
Determine the missing amounts.
|Sales Revenue | |Cost of Goods |
| Sold |
|Dec. 15 |Accounts Receivable |900 |
| Sales Revenue | |900 |
| (To record credit sale to Pocras Company) |
|15 |Cost of Goods Sold |590 |
| Inventory | |590 |
| (To record cost of goods sold on account) |
Pocras Company General Ledger
|Date |Account Title |Debit |Credit |
|Dec. 15 |Inventory |900 | |
| | Accounts Payable | |900 |
| (To record goods purchased on account from Wedell Company) |
BE6-5
In its first month of operation, Moraine Company purchased 100 units of inventory for
$6, then 200 units for $7, and finally 140 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.
|COST OF GOODS AVAILABLE FOR SALE (FIFO) |
|Date | |Explanation |

||
|Date |
|Date | |Explanation |
| |Unit Cost |
|Date | |Units | |Total Cost |
|Cameras | |$12,500 | |$13,400 | |$ 12,500 |
|Camcorders | |9,000 | |9,500 | | 9,000 |
|DVDs | |13,000 | 12,200 | 12,200 |
|Total Inventory |$ 33,700 |
Compute the lower-of-cost-or-market valuation for Olsson inventory.
BE7-4
Aldstadt 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.
Segregation of Duties, Documentation Procedures, and Independent Internal Verification
(b) All cashiers are bonded.
Human Resource Control
(c) Daily cash counts are made by cashier department supervisors.
Independent Internal Verification
(d) The duties of receiving cash, recording cash, and having custody of cash are assigned
to different individuals.
Segregation of Duties
(e) Only cashiers may operate cash registers.
Establishment of Responsibility

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 $988.62. Prepare the required journal entry based upon the cash
count sheet.
|Date |Account Title |Debit |Credit |
|Dec. 15 |Cash |1,125.74 |
| Cash Over and Short |137.12 |
| Sales Revenue | |988.62 |
| (To record cash shortfall) |
BE7-6
Ndon Company has the following internal control procedures over cash disbursements.
Identify the internal control principle that is applicable to each procedure.
(a) Company checks are pre-numbered.
Documentation Procedures
(b) The bank statement is reconciled monthly by an internal auditor.
Independent Internal Verification
(c) Blank checks are stored in a safe in the treasurers office.
Physical Controls
(d) Only the treasurer or assistant treasurer may sign checks.
Establishment of Responsibility
(e) Check signers are not allowed to record cash disbursement transactions.
Segregation of Duties