Financial accounting questions,need answer Joe is a warehouse custodian and also

Question

Financial accounting questions,need answer

Joe is a warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates documentation procedures are violated. independent internal verification is violated. segregation of duties is violated. establishment of responsibility is violated. Financial information is presented below: Operating expenses $ 28,000 Sales returns and allowances 7,000 Sales discounts 3, 000 Sales revenue 150, 000 Cost of goods sold 91,000 Gross profit would be $56, 000 $49, 000 $52, 000 $59, 000 The following information was available for Camara Company at December 31, 2014: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $560,000; and sales $800,000. Camara's inventory turnover in 2014 was 8. 0 times 6. 7 times 5. 6 times 4. 7 times In periods of falling prices, FIFO will result in a larger net income than the LIF0 method. True or False Karlin Company gathered the following reconciling information in preparing its April bank reconciliation: Cash balance per books, 4/30 $13, 200 Deposits in transit 1, 800 Notes receivable and interest collected by bank 4, 440 Bank charge for check printing 150 Outstanding checks 9, 000 NSF check 840 The adjusted cash balance per books on April 30 is $18, 450 $17, 640 $16, 650 $18, 330

Explanation / Answer

(1) C

Segregation of duties mean that one person should not be responsible for maintaining the custoty of asset, authorisation of the transaction and maintaining the accoutning record of the transaction. joe is responsible for two duties; maintain record and custody, thus segregation of duties is violated.

(2) B

Gross profit = sales revenue - sales return - sales discount - cogs = 150000-7000-3000-91000= $49000

(3) C
Inventory turnover = COGS/Average inventory = 560000/(80000+120000)/2 = 5.6

(4) False

In the period of falling price, first in first out means those higher price inventory is used first, resulting in high COGS. Thus, net income should drops.

(5)C

Adjusted cash balance = original balance - bank charge - NSF check + notes receivable and interest collected by bank = 13200 - 150-840+4440 = $16650

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