Try Magic Notes and save time.Try it free
Try Magic Notes and save timeCrush your year with the magic of personalized studying.Try it free

Related questions with answers

Mark Farmer, chief financial ofcer of Carvel Wireless, is responsible for the company’s budgeting process. Farmer’s staf is preparing the Carvel cash budget for 2017. A key input to the budgeting process is last year’s statement of cash flows, which follows (amount in thousands):

Cash Flows from Operating ActivitiesCollections from customers$65,000Interest received300Cash payments for inventory(44,000)Cash payments for operating expenses(13,900)Net cash provided by operating activities7,400Cash Flows from Investing ActivitiesPurchases of equipment(4,400)Purchases of investments(400)Sales of investments900Net cash used for investing activities(3,900)Cash Flows from Financing ActivitiesPayment of long-term debt(500)Issuance of stock1,800Payment of cash dividends(200)Net cash provided by financing activities1,100CashIncrease (decrease) in Cash4,600Cash, beginning of year3,300Cash, end of year$7,900\begin{array}{lr} \textbf{Cash Flows from Operating Activities}\\ \text{Collections from customers}&\$65,000\\ \text{Interest received}&300\\ \text{Cash payments for inventory}&(44,000)\\ \text{Cash payments for operating expenses}&(13,900)\\ \text{Net cash provided by operating activities}&7,400\\ \textbf{Cash Flows from Investing Activities}\\ \text{Purchases of equipment}&(4,400)\\ \text{Purchases of investments}&(400)\\ \text{Sales of investments}&900\\ \text{Net cash used for investing activities}&(3,900)\\ \textbf{Cash Flows from Financing Activities}\\ \text{Payment of long-term debt}&(500)\\ \text{Issuance of stock}&1,800\\ \text{Payment of cash dividends}&(200)\\ \text{Net cash provided by financing activities}&1,100\\ \textbf{Cash}\\ \text{Increase (decrease) in Cash}&4,600\\ \text{Cash, beginning of year}&3,300\\ \text{Cash, end of year}&\$7,900\\ \end{array}

  1. Prepare the Carvel Wireless cash budget for 2017. Date the budget simply “2017,” and denote the beginning and ending cash balances as “beginning” and “ending.” Assume the company expects 2017 to be the same as 2016, but with the following changes:

a. In 2017, the company expects a 12% increase in collections from customers and a 20% increase in cash payments for inventory.
b. There will be no sales of investments in 2017.
c. Carvel Wireless plans to issue no stock in 2017.
d. Carvel Wireless plans to end the year with a cash balance of $3,500 (thousand).

The cash data of Dufy Automotive for July 2016 follow:

 Cash  Date  Item  Jrnl. Ref.  Debit  Credit  Balance  July 1  Balance 7,45031 CR6 9,69317,14331 CP11 9,8857,258\begin{array}{r|c|c|c|c|c} \hline\text { Cash } \\ \hline \text { Date } & \text { Item } & \text { Jrnl. Ref. } & \text { Debit } & \text { Credit } & \text { Balance } \\ \hline \text { July 1 } & \text { Balance } & & & & 7,450 \\ 31 & & \text { CR6 } & 9,693 & & 17,143 \\ 31 & & \text { CP11 } & & 9,885 & 7,258 \\ \hline \end{array}

DateCash debitCheck No.Cash Credit July 2$2,8503113$1,532856031141,615101,69331151,8301689031167022409311779029915311897302,3763119477 Total $9,6933120990312118331222,301Total$9,885\begin{array}{rrcr} \hline\text{Date}&\text{Cash debit}&\text{Check No.}&\text{Cash Credit}\\\hline \text { July } 2 & \$ 2,850 & 3113 & \$ 1,532 \\ 8 & 560 & 3114 & 1,615 \\ 10 & 1,693 & 3115 & 1,830 \\ 16 & 890 & 3116 & 70 \\ 22 & 409 & 3117 & 790 \\ 29 & 915 & 3118 & 97 \\ 30 & 2,376 & 3119 & 477 \\ \text { Total } & \underline{\$ 9,693} & 3120 & 990 \\ & & 3121 & 183 \\ & & 3122 & 2,301 \\ &&\text{Total}&\$9,885\\ \hline \end{array}

Additional data for the bank reconciliation include the following:

a. The EFT deposit was a receipt of monthly rent. The EFT debit was a monthly insurance payment.
b. The unauthorized signature check was received from a customer and returned by the bank unpaid.
c. The correct amount of check number 3115, a payment on account, is $1,380. (Dufy Automotive’s accountant mistakenly recorded the check as$1,830.)
d. The bank collected a note receivable for Dufy Automotive.

  1. Prepare the Duffy Automotive bank reconciliation at July 31, 2016.\
  2. Prepare the journal entries required at July 31, 2016.\
  3. Describe how a bank account and the bank reconciliation help the general manager control Duffy Automotive’s cash.

Julie Brown, the owner of Julie’s Party Sandwiches, has delegated management of the business to Stacie Wood, a friend. Brown drops by to meet customers and check up on cash receipts, but Wood buys the merchandise and handles cash payments. Business has been very good lately, and cash receipts have kept pace with the apparent level of sales. However, for a year or so, the amount of cash on hand has been too low. When asked about this, Wood explains that suppliers are charging more for goods than in the past. During the past year, Wood has taken two expensive vacations, and Brown wonders how Wood can aford these trips on her $52,000 annual salary and commissions.

List at least three ways Wood could be defrauding Brown of cash. In each instance, also identify how Brown can determine whether Wood’s actions are ethical. Limit your answers to the store’s cash payments. The business pays all suppliers by check (no EFTs).


Answered 1 year ago
Answered 1 year ago
Step 1
1 of 4

In this problem, we will identify how Wood can defraud Brown of cash.

Create an account to view solutions

Create an account to view solutions

Recommended textbook solutions

Financial Accounting 11th Edition by Charles T. Horngren, C William Thomas, Walter T. Harrison Jr., Wendy M Tietz

Financial Accounting

11th EditionISBN: 9780134127620 (4 more)Charles T. Horngren, C William Thomas, Walter T. Harrison Jr., Wendy M Tietz
1,039 solutions
Financial Accounting 4th Edition by Don Herrmann, J. David Spiceland, Wayne Thomas

Financial Accounting

4th EditionISBN: 9781259730948Don Herrmann, J. David Spiceland, Wayne Thomas
1,097 solutions
Fundamentals of Financial Management 14th Edition by Eugene F. Brigham, Joel F Houston

Fundamentals of Financial Management

14th EditionISBN: 9781285867977 (1 more)Eugene F. Brigham, Joel F Houston
845 solutions
Century 21 Accounting: General Journal 11th Edition by Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman

Century 21 Accounting: General Journal

11th EditionISBN: 9781337623124Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman
1,012 solutions

More related questions