Case study on Financial Accounting
- Why would a company offer to sell to their customers on account (Accounts Receivable) since bad
Debts are inevitable
One reason why a company may offer to sell to their customers on account is because of the speedy inflow of cash.
- For each of the following situations, indicate which internal control procedure ABC company has violated:
- Comparisons and compliance monitoring.
- Smart hiring practices
- Limited access.
- Adequate records.
- Proper approvals.
- Segregation of duties.
- New Street Corporation had accounts receivable of $110,000 at the beginning of the year and $125,000 at the end of the year. Sales on account for the year amounted to $575,000. SHOW your calculations and give the amount to be reported on the statement of cash flows for collections from customers under the operating activities.
- Zimbalist Corporation reports a decrease in Salaries Payable of $5,000. If Salaries Expense totaled $187,000 for the year, what amount of cash was paid to employees Show all your calculations.
- During the year, Lady Liberty Corporation’s treasury stock increased $50,000 from a cash purchase of stock, cash dividends were paid totaling $44,000 and the company reported net income of $200,000. Show your calculations and give the amount of Net Cash USED by Financing Activities on the statement of cash flows (indirect method).
- A company reports the following balances:
|Paid-in Capital in Excess of Par||100,000||110,000|
During 2016, dividends of $15,000 were declared and paid. What is net income for 2016 Show all calculations.
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