Concept Introduction:
Morals are judgments, standards, and rules of good conduct in the society. They guide people toward permissible behavior with regard to basic values.
Bank Reconciliation:
Bank reconciliation is the process in which the entity reconciles its cash entries in accounts with the entries in bank statement issued by the bank. The entity prepares
To Indicate:
If controller's behavior is professional or not
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Chapter 5 Solutions
Survey of Accounting (Accounting I)
- What Would You Say? A friend of yours wants to start her own pet-sitting business. She already has a business license that is required in her city. She has had a personal checking account for years. You have told her that she also needs to open a separate account for her business needs, but she does not understand why she needs to have two separate accounts. Explain to her why she should have a business account separate from her personal account. Use some of the language of business you have learned in your texts Introduction and in this chapter.arrow_forwardAssume that you are the controller of a business that provides legal services to clients. Suppose that the company has had a tough year, so the revenues have been lagging behind, based on previous years standards. What would you do if your boss (the chief executive officer [CEO] of the company) asked to reclassify a transaction to report loan proceeds of $150,000 as if the cash came from service fee revenue from clients instead. Would following the CEOs advice impact the companys accounting equation? How would reclassifying this one transaction change the outcome of the balance sheet, the income statement, and the statement of retained earnings? Would making this reclassification change the perception that users of the financial statements would have of the companys current year success and future year potential? Write a memo, detailing your willingness (or not) to embrace this suggestion, giving reasons behind your decision. Remember to exercise diplomacy, even if you must dissent from the opinion of a supervisor. Note that the challenge of the assignment is to keep your integrity intact, while also keeping your job, if possible.arrow_forwardWhat Would You Do? You are responsible for preparing all of the journal entries for Regional Financial Services. You have correctly prepared the following entry for financial services provided on December 15: Your boss has asked you to change the date from December 15 to January 15 so that the business’s profit, and thus taxes, would be lower. Are you allowed to do this? What is your response to your boss? How should you handle this situation?arrow_forward
- A retail store normally has three people working in the evening. All of the employees have access to the same cash register. For the last month, the cash count at the end of the evening has been recording losses. The losses range from $5 to $300. So the manager has decided to be the only one to count the cash at the end of the evening to keep the losses from happening. Discuss if the change made by the manager is a good one. Will the losses keep happening, or will this change prevent losses due to theft? What other recommendations and changes should be considered by this manager?arrow_forwardB. Kelso established Computer Wizards during November of this year. The accountant prepared the following chart of accounts: The following transactions occurred during the month: a. Kelso deposited 45,000 in a bank account in the name of the business. b. Paid the rent for the current month, 1,800, Ck. No. 2001. c. Bought office desks and filing cabinets for cash, 790, Ck. No. 2002. d. Bought a computer and printer from Cyber Center for use in the business, 2,700, paying 1,700 in cash and placing the balance on account, Ck. No. 2003. e. Bought a neon sign on account from Signage Co., 1,350. f. Kelso invested her personal computer software with a fair market value of 600 in the business. g. Received a bill from Country News for newspaper advertising, 365. h. Sold services for cash, 1,245. i. Received and paid the electric bill, 345, Ck. No. 2004. j. Paid on account to Country News, a creditor, 285, Ck. No. 2005. k. Sold services for cash, 1,450. l. Paid wages to an employee, 925, Ck. No. 2006. m. Received and paid the bill for the city business license, 75, Ck. No. 2007. n. Kelso withdrew cash for personal use, 850, Ck. No. 2008. o. Kelso withdrew cash for personal use, 850, Ck. No. 2008. Required 1. Record the owners name in the Capital and Drawing T accounts. 2. Correctly place the plus and minus signs for each T account and label the debit and credit sides of the accounts. 3. Record the transactions in T accounts. Write the letter of each entry to identify the transaction. 4. Foot the T accounts and show the balances. 5. Prepare a trial balance, with a three-line heading, dated November 30, 20--.arrow_forwardThe following is an excerpt from a conversation between two employees of WXT Technologies, Nolan Sears and Stacy Mays. Nolan is the accounts payable clerk, and Stacy is the cashier. Nolan: Stacy, could I get your opinion on something? Stacy: Sure, Nolan. Nolan: Do you know Rita, the fixed assets clerk? Stacy: I know who she is, but I don't know her real well. Why? Nolan: Well, I was talking to her at lunch last Monday about how she liked her job. You know, the usual; and she mentioned something about having to keep two sets of books—one for taxes and one for the financial statements. That can't be good accounting, can it? What do you think? Stacy: Two sets of books? It doesn't sound right. Nolan: It doesn't seem right to me either. I was always taught that you had to use generally accepted accounting principles. How can there be two sets of books? What can be the difference between the two? How would you respond to Nolan and Stacy if you were Rita?arrow_forward
- Elizabeth Wong has strong problem solving skills and loves to work with people. After becoming a Certified Human Resources Professional (CHRP) and working for serval companies, she opened her own business, HR Solutions. She completed the following transactions during May 2020: May 1 Invested $78,000 in cash and office equipment that had a fair value of $51,000 in the business. 1 Prepaid $15,300 cash for three months rent for an office 2 Made credit purchases of office equipment for $25,500 and office supplies for $5,100 6 Completed a report on hiring solutions for a client and collected $8,300 cash 9 Completed a $16,300 project implementing a training program for a client, who will pay within 30 days 10 Paid half of the account payable created on May 2 19 Paid $7,800 cash for the annual premium on an insurance policy 22 Received $13,100 as partial payment for the work completed on May 9…arrow_forwardElizabeth Wong has strong problem solving skills and loves to work with people. After becoming a Certified Human Resources Professional (CHRP) and working for serval companies, she opened her own business, HR Solutions. She completed the following transactions during May 2020: May 1 Invested $78,000 in cash and office equipment that had a fair value of $51,000 in the business. 1 Prepaid $15,300 cash for three months rent for an office 2 Made credit purchases of office equipment for $25,500 and office supplies for $5,100 6 Completed a report on hiring solutions for a client and collected $8,300 cash 9 Completed a $16,300 project implementing a training program for a client, who will pay within 30 days 10 Paid half of the account payable created on May 2 19 Paid $7,800 cash for the annual premium on an insurance policy 22 Received $13,100 as partial payment for the work completed on May 9…arrow_forwardElizabeth Wong has strong problem solving skills and loves to work with people. After becoming a Certified Human Resources Professional (CHRP) and working for serval companies, she opened her own business, HR Solutions. She completed the following transactions during May 2020: May 1 Invested $78,000 in cash and office equipment that had a fair value of $51,000 in the business. 1 Prepaid $15,300 cash for three months rent for an office 2 Made credit purchases of office equipment for $25,500 and office supplies for $5,100 6 Completed a report on hiring solutions for a client and collected $8,300 cash 9 Completed a $16,300 project implementing a training program for a client, who will pay within 30 days 10 Paid half of the account payable created on May 2 19 Paid $7,800 cash for the annual premium on an insurance policy 22 Received $13,100 as partial payment for the work completed on May 9…arrow_forward
- Evaluate Pete Donaldson’s ethical behavior. b. Suppose that you have been hired as the chief finance officer for Donaldson Mining Supplies. You have been told that the $30,000 has been donated to the company. During the second week of your employment, the father-in-law drops in unexpectedly and introduces himself. He then asks you how the company is doing and wants to know if his $30,000 loan is still likely to be repaid in 3 years. Suppose also that same day you overhear an employee mention that the safety equipment is no longer usable because regulations now require a newer and different model. b.1 Assume that you have yet to prepare the financial statements for the loan application. What should you do? b.2 Suppose that the financial statements have been prepared and submitted to the bank. In fact, that morning, you had received a call from the bank, indicating that a decision was imminent and that the line of credit would likely be approved. What should you do under these…arrow_forwardIdentify factors in an ethical decision. Jim Sandrolini is an accountant for a local manufacturing company, Jim's good friend, Dan Carruthers, has been operating a retail sporting goods store for about a year. The store has been moderately successful, and Dan needs a bank loan to help finance the next stage of his store's growth. He has asked Jim to prepare financial statements that the banker will use to help decide whether to grant the loan. Dan has proposed that the fee he will pay for Jim's accounting work should be contingent upon his receiving the loan. Required: What factors should Jim consider when making his decision about whether to prepare the financial statements for Dan's store?arrow_forwardRead the following scenarios and answer the questions that follow: i) A young graduate has just been employed as the Receivable Officer, responsible for billing of customers, maintaining customers’ accounts and preparing monthly control accounts. Management has found out that the officer has not been straightforward and honest in the discharge of his duties. He was found to be “cutting corners” and connives with the customers to understate their bills and accounts in order to enrich himself. Management has fired him sadly. ii) You met a friend in church recently and she was looking very flashy, showing clearly that she got a good job. Upon a short conversation, she indicated that she is blessed to be in charge of the payroll of the company. In fact, she told you exactly how much your four other mates working in that organisation are earning. She went further to inform you that the new car driven by Jojo, a popular mate back in school, was a loan of GHc100,000 he took from a bank and…arrow_forward
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