ACC225 Week 8 Assignment

Problem 8-1A

Analyzing internal control

C1

For each of these five separate cases, identify the principle of internal control that is violated.

Recommend what the business should do to ensure adherence to principles of internal control.

1. Heather Flatt records all incoming customer cash receipts for her employer and posts the customer payments to their respective accounts. – The internal control that was overlooked or violated is “divide responsibility for related transactions”.  There should be two individuals doing these two related tasks.  This would serve as a check each for the other to prevent errors or intentional mistakes.  The company should designate another employee to do either the incoming cash receipts or posting to customer accounts. 

2. At Netco Company, Jeff and Jose alternate lunch hours. Jeff is the petty cash custodian, but if someone needs petty cash when he is at lunch, Jose fills in as custodian. – The petty cash custodian should never alter between two individuals.  There is no internal control of separation of duties.  In case of theft or error, neither employee can ethically be held responsible for the petty cash since there would be no way to tell which was in charge during the error.  This company should pick between Jeff and Jose to be custodian alone.

3. Nadine Cox posts all patient charges and payments at the P-Town Medical Clinic. Each night

Nadine backs up the computerized accounting system to a tape and stores the tape in a locked file at her desk. – This example violates the internal control that asks for separation of duties.  Nadine has no secondary person to ensure that her input was correct before she backs up the computer and files the tapes.  This company should have a separate person in control of the locked drawers and/or backing up the computer.  Putting another person in either position would help keep internal control, two people would be ideal, one to back up and one to keep the locked cabinet. 

4. Barto Sayles prides himself on hiring quality workers who require little supervision. As office manager, Barto gives his employees full discretion over their tasks and for years has seen no reason to perform independent reviews of their work. – This violates the internal control of performing regular and independent reviews of employee work.  The fact that there has been no visible reason to perform independent reviews is not adequate evidence that it is not needed.  This could simply be a case of no one has been caught yet instead of no one is misbehaving, but without the reviews the manager may never know. This manager should instate independent and regular reviews.

5. Desi West’s manager has told her to reduce costs. Desi decides to raise the deductible on the plant’s property insurance from $5,000 to $10,000. This cuts the property insurance premium in half. In a related move, she decides that bonding the plant’s employees is a waste of money since the company has not experienced any losses due to employee theft. Desi saves the entire amount of the bonding insurance premium by dropping the bonding insurance. – This violates the internal control of keeping all employees bonded.  This internal control protects the company against employee theft.  Just because there have been no issues, does not mean there will not be and Desi should not ever drop bonding insurance. 

Problem 8-3A

Establish, reimburse, and increase

petty cash

P2

Inoke Gallery had the following petty cash transactions in February of the current year:

Feb. 2 Wrote a $300 check, cashed it, and gave the proceeds and the petty cashbox to Bo Brown, the petty cashier.

5 Purchased bond paper for the copier for $10.13 that is immediately used.

9 Paid $22.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Metro uses the perpetual system to account for merchandise inventory.

12 Paid $9.95 postage to express mail a contract to a client.

14 Reimbursed Alli Buck, the manager, $58 for business mileage on her car.

20 Purchased stationery for $77.76 that is immediately used.

23 Paid a courier $18 to deliver merchandise sold to a customer, terms FOB destination.

25 Paid $15.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.

27 Paid $64 for postage expenses.

28 The fund had $21.23 remaining in the petty cash box. Sorted the petty cash receipts by accounts affected and exchanged them for a check to reimburse the fund for expenditures.

The fund amount is also increased to $400.

Required

1. Prepare the journal entry to establish the petty cash fund.

2. Prepare a petty cash payments report for February with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense. Sort the payments into the appropriate categories and total the expenditures in each category

3. Prepare the journal entries for part 2 to both (a) reimburse and (b) increase the fund amount.

Date	Accounts		Debit	Credit
Feb 2	Petty Cash		300
		Cash		300
Feb 28	Delivery expense		82
	Mileage expense		58
	Postage expense		9.95
	Merchandise inventory (for transportation-in)		37.60
	Office supplies expense		87.89
	Cash over or short		3.33
	Petty Cash		100
		Cash		378.77

ACC225 Week 8 Checkpoint

QS 8-6

Bank reconciliation

P3

1.      For each of the following items, indicate whether its amount (i) affects the bank or book side of a bank reconciliation and (ii) represents an addition or a subtraction in a bank reconciliation:

a.       Outstanding checks          Bank                Subtraction in Bank reconciliation

b.      Debit memos                     Book               Subtraction in Bank reconciliation

c.       NSF checks                       Book               Subtraction in Bank reconciliation

d.      Unrecorded deposits         Bank                Addition in Bank reconciliation

e.       Interest on cash balance    Book               Addition in Bank reconciliation

f.       Credit memos                    Book               Addition in Bank reconciliation

g.      Bank service charges         Book               Subtraction in Bank reconciliation

2.      Which of the items in part 1 require an adjusting journal entry?  Only those items that adjust the book balance require an adjusted journal entry.  In this case those would be debit memos, nsf checks, interest on cash balance, credit memos and bank service charges. 

Exercise 8-3

Analyzing internal control

C1

Bemis Company is a rapidly growing start-up business. Its recordkeeper, who was hired one year ago, left town after the company’s manager discovered that a large sum of money had disappeared over the past six months. An audit disclosed that the recordkeeper had written and signed several checks made payable to her fiancé and then recorded the checks as salaries expense. The fiancé, who cashed the checks but never worked for the company, left town with the recordkeeper. As a result, the company incurred an uninsured loss of $84,000. Evaluate Bemis’s internal control system and indicate which principles of internal control appear to have been ignored.

Several internal controls appear to either have been circumvented or were not put in place.  First of all there is no separation of duties (#4).  The same person who approves the spending of the funds is the same person as the one who cuts the checks.  There is also the question of if this is the same person who signs the checks or is this simply a case of the signer did not look at the checks and verify before signing.  Also, obviously there was a breakdown of adequate and correct records, as she would have altered books to appear legitimate (#2).   I am assuming there were no adequate technological controls to protect against this kind of theft, since she was capable of getting around them (#6).  The story did indicate the recordkeeper was not insured which is a breakdown of the internal control indicating employees should be bonded and assets insured (#3).  There was also no back up to check the records of this employee so the internal control that talks about division of responsibility for related transactions was ignored as well (#5).  Finally, I would say that six months is too long for a brand new company to go without an internal audit, especially since their recordkeeper was apparently responsible for many individual tasks and this would indicate that the last internal control was also ignored that indicates that regular and independent reviews take place (#7).

Exercise 8-4

Petty cash fund with a shortage

P2

Gannon Company establishes a $400 petty cash fund on September 9. On September 30, the fund shows $166 in cash along with receipts for the following expenditures: transportation-in, $32; postage expenses, $113; and miscellaneous expenses, $87. The petty cashier could not account for a $2 shortage in the fund. Gannon uses the perpetual system in accounting for merchandise inventory. Prepare (1) the September 9 entry to establish the fund and (2) the September 30 entry to both reimburse the fund and reduce it to $300.

Date	Account	Debit	Credit
Sept 9	Petty Cash	400
	Cash		400
Sep 30	Transportation-in	32
	Postage expenses	113
	Misc expenses	87
	Cash over or short	2
	Cash		234
	Cash	100
	Petty Cash		100

                                    

Energy Resource Plan

.     Assignment: Energy Resource Plan

You are a board member of your Home Owner’s Association. At your next meeting, your goal is to educate other homeowners about energy conservation.

         Review the following Energy Resource Plan outline:

         Introduction:

         Provide information about why conserving energy is important.

         Renewable versus Nonrenewable

  Briefly distinguish between these two types of energy.

         Methods to conserve and help the environment

  What can each member do, personally, to conserve energy and help the environment at the same time?

  Provide at least three methods.

         Government efforts

  How can the government be involved in conservation efforts?

         Conclusion

  Wrap up the meeting with a brief summary of your main points.

  Provide some motivation for conserving energy with a memorable slogan, statement, or song, for example.

         Conduct either Option 1 or Option 2.

1.     Create a 7- to 10-slide PowerPoint^® that includes all of the elements in the Energy Resource Plan outline. Include speaker notes as appropriate.

2.     Write a 350- to 700-word paper that includes all elements of the Energy Resource Plan outline.

         Format your paper according to APA guidelines.

         Post your paper as an attachment.

Conserving energy is important for not only the environment but our health. By conserving energy we are preserving our way of life. Some nonrenewable energy sources leek harmful gases into the air that destroy our ozone and cause all kinds of health issues for those who live where these gases are denser. Something as simple as turning off lights or appliances that are not in use can lower your electric bill. If everyone conserved just a little, when you add that to the millions of other users doing the same thing, it adds up to be a lot of energy saved.

There is one very distinguishable difference between renewable and nonrenewable energy sources. It is their ability to be reused or not. Nonrenewable sources cannot be used again, once used. Renewable sources, obviously, are able to be used over and over again.

There are several things we can do to help conserve energy in our own lives that will also help the environment. One of the simplest conservation efforts is change all your incandescent light bulbs to fluorescent light bulbs. Not only will this give you up to five years per bulb saving you money, but it will also reduce your energy bill since fluorescent bulbs do not take as much energy to run as incandescent bulbs. Another way of conserving energy while helping the environment is to get involved and participate in Earth Hour every year. Earth hour is one hour every year in which everyone turns off every electrical appliance for a whole hour. This action symbolizes a world wide effort by the World Wildlife Fund to demand action on climate change. Besides the message this sends, everyone around the world turning off every appliance even for just one hour can save millions of watts of energy. Gasoline, being a major contributor to the pollution of the air and breakdown of the ozone, is one energy source you can cut down use of in order to conserve energy and help the environment. You can choose an alternative method of transportation, like a bicycle, carpooling, or take the city bus. You could also buy a hybrid car or other more energy efficient vehicle.

Probably the biggest thing the government can do to help with conservation efforts are to explore other energy methods such as biomass fermentation, use of solar energy, and wind efforts. Biomass fermentation uses the crop leftovers and converts this into gas for vehicles as an alternative to gasoline. Converting roofs into solar panels to run the electricity of the building is great way of using a renewable energy source.

Every one of us can do something to help; even the smallest effort of changing our light bulbs or carpooling to work can prove to be very helpful when combined with all the other people doing the same thing. Join a group such as participating in Earth Hour to tell our governments it is time for a change. If we can employ other energy methods to help us with our day to day lives without destroying our ozone or polluting our air or oceans we would be a healthier people and be able to extend the life of our Earth.

References:

No references were used that could not be considered common knowledge.

.     Assignment: Energy Resource Plan

You are a board member of your Home Owner’s Association. At your next meeting, your goal is to educate other homeowners about energy conservation.

         Review the following Energy Resource Plan outline:

         Introduction:

         Provide information about why conserving energy is important.

         Renewable versus Nonrenewable

  Briefly distinguish between these two types of energy.

         Methods to conserve and help the environment

  What can each member do, personally, to conserve energy and help the environment at the same time?

  Provide at least three methods.

         Government efforts

  How can the government be involved in conservation efforts?

         Conclusion

  Wrap up the meeting with a brief summary of your main points.

  Provide some motivation for conserving energy with a memorable slogan, statement, or song, for example.

         Conduct either Option 1 or Option 2.

1.     Create a 7- to 10-slide PowerPoint^® that includes all of the elements in the Energy Resource Plan outline. Include speaker notes as appropriate.

2.     Write a 350- to 700-word paper that includes all elements of the Energy Resource Plan outline.

         Format your paper according to APA guidelines.

         Post your paper as an attachment.

Energy Resource Challenges

1.     CheckPoint: Energy Resource Challenges

 

         View the Alternative Energy VLR located under the Week Eight Materials section of your student Web page.

         Post a 200- to 300-word response to the following:

 

o    Describe all of the renewable energy alternatives presented in the video.

o    What are some challenges with using and managing these alternative, renewable energy resources?

o    Name at least one other renewable energy resource not presented in the video.

o    Include a response to the following statement: Nonrenewable energy resources include coal, oil, and natural gas.

o    Describe three common challenges with managing nonrenewable energy resources.

The video Alternative Energy VLR described several renewable energy alternatives. One source that was discussed was wind power. One challenge of using wind power is you need wind to power these turbines. Without the wind there is no power. Another source discussed in the video is solar power. There is the same challenge with solar power as wind power. If there is no sun, there is no power. The last renewable energy source discussed in the video is biomass fermentation. Farmers take the leftovers from harvesting their crops and scientists can turn that into ethanol which is added to gas, or can be used as an alternative to gas for automobiles. Ethanol is healthier for the ecosystem that petrol oil gasoline. One challenge of biomass fermentation would be the availability of the crop leftovers. Also this would rely on farmers gathering this material and recycling it to be used as fuel.

Nonrenewable energy resources include coal, oil, and natural gas. Renewable outnumber nonrenewable sources and are better for the environment. One challenge with managing these resources is the availability of the raw materials needed to produce them. Another challenge would be that they help destroy our ecosystem with every use. And a third challenge to managing these sources is the disposal of the waste products from producing these sources.

One renewable resource not mentioned in the video is the hemp plant. This renewable resource can be used to make eco-friendly clothing. A nutritional source, used in medicine, to make paper, building material, cordage and is very healthy for the soil it is grown in. Due to the stigma of being associated with marijuana, this resource has little hope of being used despite its ability to help our environment repair itself.

Asian Americans According to the U.S. Census Bureau

1.     CheckPoint: Asian Americans According to the U.S. Census Bureau

·         Complete the matrix in Appendix E using information from the Asian Pacific American Heritage Month press release, at http://www.census.gov/Press-Release/www/releases/archives/facts_for_features_special_editions/001738.html, on the U.S. Census Bureau Web site.

·         Post the completed Appendix E as an attachment.

Axia College Material

Appendix E

Asian Americans According to the U.S. Census Bureau

Part I

Organize statistics from the U.S. Census Bureau on Asian American diversity using the matrix below. The Web site is available at http://www.census.gov/Press-Release/www/releases/archives/facts_for_features_special_editions/001738.html

Statistic 1 of the Cultural Makeup column is provided for your reference. Note: you will find only two statistics to place in the Financial row.

	Statistic 1	Statistic 2	Statistic 3
Cultural Makeup	13.1 million U.S. residents are Asian or Asian in combination with other races	8.3 million The number of foreign-born residents in the United States who were born in Asia	48% The percentage of the foreign-born population from Asia who are naturalized U.S. citizens
Financial	$52,018 The 2002 median income of households whose householders reported their race as either Asian or native Hawaiian and other Pacific islander (and who may or may not have reported any other race)	70% The percentage of Asians and Pacific islanders who are naturalized-citizen householders and who own their homes.
Nationality	943,000 The estimated number of U.S. residents who say they are native Hawaiian and other Pacific islander or native Hawaiian and other Pacific islander in combination with one or more other races	33.4 million The projected number of U.S. residents who will identify themselves as Asian alone in 2050.	213% The projected percentage increase between 2000 and 2050 in the population of people whose only race is Asian
Education	47% The percentage of Asians and Pacific islanders age 25 and over with a bachelor’s degree or higher.	87% The percentage of Asians and Pacific islanders 25 and over who are high school graduates	16% The percentage of Asians and Pacific islanders 25 and over with an advanced degree (e.g., master’s, Ph.D., M.D. or J.D.).
Career	About 75 percent of Asian and Pacific islander men age 16 and over and 59 percent of women are in the civilian labor force.	105,300 The number of physicians and surgeons who report Asian as their only race and who are not Hispanic.	351,000 The number of Asian American military veterans.
Demographics	95% The percentage of Asian and Pacific islanders who live in metropolitan areas.	4.5 million The number of California residents who are Asian,	58% The percentage of Hawaii’s population that is Asian, tops in the nation.
Lifestyle	2.0 million The number of people who speak Chinese at home.	73% The percentage of Asian and Pacific islander households made up of families.	10.2% The poverty rate in 2002 for those who reported their race as either Asian or native Hawaiian and other Pacific islander (and may or may not have reported any other race).

Part II

Next, answer the following questions:

a.     What do these statistics reveal about Asian diversity in America?

           

            These statistics show that although the Asian population is still a small part of the US population it is growing every year.  With a large part of the population assuming degrees and high paying jobs. 

b.     What do you believe is the future of Asian diversity in America?

           

            This shows a trend for the future.  According to these statistics the Asian population should continue to grow and assume more higher paying jobs than other minorities. 

Reference

U.S. Census Bureau. (2004, April 19). Asian Pacific American heritage month: May 2004. Retrieved December 1, 2004, from http://www.census.gov/Press-Release/www/releases/archives/facts_for_features_special_editions/001738.html