BUS FPX 4060 Assessment 3 Internal Control and Accounting for Assets

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Capella University

BUS-FPX4060 Financial Accounting Principles

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Date

FINANCIAL ACCOUNTING PRINCIPLES

Assessment 3: Internal Control and Accounting for Assets Worksheet

This document outlines the completion of three exercises related to internal control and accounting for assets. Each exercise requires the application of financial accounting principles to analyze transactions, prepare journal entries, and calculate depreciation using different methods. The responses are structured in paragraphs and tables, adhering to APA formatting.

Exercise 3-1: Bank Reconciliation and Journal Entries

The Scheiffer Company’s October 31, 2012, bank reconciliation involves reconciling the cash book and bank statement balances. The adjustments include outstanding checks, a note collection, interest earned, and corrections for errors. The reconciliation ensures that the adjusted bank balance equals the adjusted book balance.

Bank Reconciliation

Details	Amount
Bank Statement Balance	$17,796.80
Add: Deposits in Transit	$0.00
Less: Outstanding Checks	$1,729.60
Adjusted Bank Balance	$16,067.20
Book Balance	$15,252.20
Add: Collection of Note	$1,430.00
Add: Interest Earned	$20.75
Less: NSF Check	$605.75
Less: Recording Error	$30.00
Adjusted Book Balance	$16,067.20

BUS FPX 4060 Assessment 3 Internal Control and Accounting for Assets

Journal Entries

Date	Account	Debit ($)	Credit ($)
Oct 31, 2012	Cash	1,430.00
	Notes Receivable		1,450.00
	Collection Fee	20.00
Oct 31, 2012	Cash	20.75
	Interest Revenue		20.75
Oct 31, 2012	Accounts Receivable	605.75
	Cash		605.75
Oct 31, 2012	Office Equipment	30.00
	Cash		30.00

Exercise 3-2: Bad Debt Transactions

2011 Transactions

In 2011, the Russell Company recorded credit sales of $1,575,000 and received payments amounting to $822,500. Bad debts of $18,100 were written off, and an additional estimate of $32,788 was recorded for uncollectible accounts.

Transaction	Amount
Credit Sales	$1,575,000
Payments Received	$822,500
Bad Debt Write-off	$18,100
Estimated Bad Debts	$32,788

BUS FPX 4060 Assessment 3 Internal Control and Accounting for Assets

2012 Transactions

In 2012, the company recorded credit sales of $1,592,000 and collected $1,428,300. Bad debts of $24,500 were written off, and an additional estimate of $27,284 was recorded for uncollectible accounts.

Transaction	Amount
Credit Sales	$1,592,000
Payments Received	$1,428,300
Bad Debt Write-off	$24,500
Estimated Bad Debts	$27,284

Exercise 3-3: Depreciation Calculation

Depreciation Analysis for Hanover Beverage Company

Straight-Line Method
The annual depreciation expense is calculated by dividing the depreciable cost by the useful life of the machine.

Year	Annual Depreciation ($)	Accumulated Depreciation ($)	Book Value ($)
1	35,100	35,100	159,900
2	35,100	70,200	124,800
3	35,100	105,300	89,700
4	35,100	140,400	54,600

Units-of-Production Method
This method allocates depreciation based on the number of units produced.

Year	Units Produced	Depreciation Expense ($)	Accumulated Depreciation ($)	Book Value ($)
1	121,000	44,241	44,241	150,759
2	119,500	43,692	87,933	107,067
3	122,600	44,826	132,758	62,242
4	123,000	44,972	177,730	19,500

Double-Declining Balance Method
This accelerated method applies a rate of 40% on the book value at the beginning of each year.

Year	Depreciation Expense ($)	Accumulated Depreciation ($)	Book Value ($)
1	78,000	78,000	117,000
2	46,800	124,800	70,200
3	28,080	152,880	42,120
4	16,848	169,728	25,272

References

Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2020). Intermediate accounting (17th ed.). Wiley.