Question

financial accounting problems 22-25

22. Falcon, Lac, prepared facilements for Your Own and b e them to dependent codice firm for m o n. The company has a perpetual inventory system and uses FIFO a ta cort Low asumption. On December 23rd, Your Falcon ardered S47,000 (material mount) of investory from supplier. Falcon believed the goods were shipped to them on January 2, X e rg so it made no entry in Year One. The nuditor discovered that the goods were actually shipped on December 30th, Year On mnd received by Falcon on January 3, Yes Two. The purchase order and the invoice both indicated freight terms as "FOB Shipping Point". What adjusting entry, if any, will the auditors recommend that Falcon make to its Year One financial statement? 4. Debit inventory $47,000 and credit accounts payable for the same amount b. Credit inventory 547,000 and debit accounts payable for the same amount c. Debit cost of goods sold 547,000 and credit accounts payable for the same amou d. Debit accounts payable 347,000 and credit cost of goods sold for the same e. No adjusting entry should be made. 23. In establishing a strong internal control system at Falcon Company, management is concerned with both accounting and administrative controls. An example of an "administrative control would include: the reconciliation of the bank statement each month b. Ensuring the accuracy of the recording procedures for cash. the establishment and use of management performance evaluation d. the maintenance of accurate inventory records regardless of the cost sow used. 24. Freida is an accounting clerk for ABC department store. Her husband, Fred, owns an office supply business. Frieda paid her husband's business for supplies ABC Bever ordered or received. Which of the following practices would allow Frieda to perpetuate this fraud? Keeping pre-numbered checks under lock and key Requiring a single person to approve disbursements, sign checks, and reconcile the checking account Requiring one employee to approve supporting documents and a different employee to sign cheches d Marking supporting documents "paid" when checks are siped c 25. The bank statement for Ferrell & Kerr, Inc., received from First Falcon Bank reported a bank balance of $20,100 at the end of June. As internal analysis of this statement, and the companies' accounting records, revealed the following - Determined that two deposits were transit $2,450 (in total) - Bank debit memo for service charge: $26.50 (found on the bank statement) - Determined that four outstanding checks existed: 5930 (in total - Bank credit memo for interest earned: $13.00 (found on the bank statement) bank cash balance at the end of June would be After considering only tope! reconcilities, the $20.100.00 b $20.850.00 c. $21.570.00 d $22,373.50

Answer 1

22. Option A

Debit inventory $47,000 and credit accounts payable $47,000

FOB shipping point:- If the shipment is designated as freight on board (FOB) shipping point, ownership transfers to the buyer as soon as the shipment departs the seller.

FOB Destination:- If the shipment is designated as freight on board (FOB) destination, ownership transfers to the buyer as soon as the shipment arrives at the buyer.

23. Option C

the establishment and use of management performance evaluation.

24. Option D

marking supporting documents "paid" when checks are signed

25. Option C.

$21,570

• Checks deposited are in transit but not recorded in the bank statement must be added back to bank balance.
• Checks issued but not processed by the bank ( Outstanding checks) must be deducted.
• Bank service charges and bank interest have already been shown in bank statement. So they don't have any impact on bank balance. So they are considered.