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Snake Creek Company has one trusted employee who, as the owner said, handles all of the book-keeping and paperwork for the company. This employee is responsible for counting, verifying, and recording cash receipts and payments, making the weekly bank deposit, preparing checks for major expenditures (signed by the owner), making small expenditures from the cash register for daily expenses, and collecting accounts receivable. The owners asked the local bank for a $ 20,000 loan. The bank asked that an audit be performed covering the year just ended. The independent auditor ( a local CPA), in a private conference with the owner, presented some evidence of the following activities of the trusted employee during the past year: a. Cash sales sometimes were not entered in the cash register, and the trusted employee pocketed approximately $ 50 per month. b. Cash taken from the cash register ( and pocketed by the trusted employee) was replaced with expense memos with fictitious signatures ( approximately $ 12 per day). c. $ 300 collected on an account receivable from a valued out- of- town customer was pocketed by the trusted employee and was covered by making a $ 300 entry as a debit to Sales Returns and a credit to Accounts Receivable. d. $ 800 collected on an account receivable from a local customer was pocketed by the trusted employee and was covered by making an $ 800 entry as a debit to Sales Discounts and a credit to Accounts Receivable. Required: 1. What was the approximate amount stolen during the past year? TIP: Assume employees work 5 days a week, 52 weeks a year. 2. What would be your recommendations to the owner?
On this date, the company concludes that the equipment has a remaining useful life of only 5 years with the same salvage value. Compute the revised annual depreciation.
Hutchinson Company had retained earnings of $10,000 on the balance sheet but disclosed in the footnotes that $2,000 of retained earnings was restricted for plant expansion and $1,000 was restricted for bond repayments. Cash of $2,000 had been set ..
How much goodwill did World Media purchase as part of the acquisition of The Dandy Dime?
With a restricted policy, current assets will be 15% of sales. Under a relaxed policy, current assets will be 25% of sales. What is the difference between the projected ROEs between the restricted and relaxed policies?
Kathy owns and operates a grocery store as a sole proprietor. She pays wages to her husband Joe and their 17-year-old daughter Marla, both of whom work at the store. Should Kathy withhold FICA taxes FICA taxes from the wages paid to Joe and Marla?
Hope receives an $18,500 scholarship from State University. The university specifies that $8,500 is for tuition, books, supplies, and equipment, while $10,000 is for room and board. In addition, Hope works part-time at the campus library and earns..
A company grosses $100 million per year and shows a 12 percent profit. It hires a security director, a security staff, and security equipment, which costs the company $2 million per year but reduces its losses, or "shrinkage," from 9 percent to 5 ..
Calculate the amount of accumulated depreciation to be debited or credited in the preparation of the 2009 consolidated balance sheet.
On December 31, 2008, Kean Company changed its method of accounting for inventory from weighted average cost method to the FIFO method. This change caused the 2008 beginning inventory to increase by $420,000. The cumulative effect of this accounti..
Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas on November 17, 2013. The units have a list price of $500 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/10, n/30. Thomas uses a periodic in..
Who is General Mills auditor? On what date did the auditor completeits audit work?
Billing's Pit corporation has an accounts receivable ratio of 3.4. What is Billing's Pit corporation average collection period?
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