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Case study on Financial Accounting



Case study on Financial Accounting



  1. 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.





  1. For each of the following situations, indicate which internal control procedure ABC company has  violated:


  1. Comparisons and compliance monitoring.
  2. Smart hiring practices
  3. Limited access.
  4. Adequate records.
  5. Proper approvals.
  6. Segregation of duties.



  1. 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.




  1. 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.




  1. 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).


  1. A company reports the following balances:


Common Stock$150,000$160,000
Paid-in Capital in Excess of Par100,000110,000
Retained Earnings70,00080,000


During 2016, dividends of $15,000 were declared and paid. What is net income for 2016 Show all calculations.





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