Page 357 - Accounting Principles (A Business Perspective)

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Restaurant 35.88 per cent 39.05 per cent 39.70 per cent 38.18 per cent
Ice cream parlor 40.57 per cent 27.49 per cent 21.15 per cent 12.32 per cent
Either cash or inventory is being stolen or given away in the ice cream parlor. Employees or outsiders may be

pocketing cash. Or the employees may be giving extra-large ice cream cones to friends, or eating the ice cream
themselves. Several things could be done to improve the sales control procedures:
• The manager could hire an investigator to come in and watch the employees in action. If cash is being
pocketed, the employees could be fired.
• The prices of ice cream cones could be changed to odd amounts so that employees would not be as able to
make change without going to the cash register. Also, the No Sale lever could be removed from the cash
register.
• The customers could be encouraged to ask for their cash register receipts by having a monthly drawing (for
some prize) by cash register receipt number.

• The cash register should be placed in a prominent position so that each customer could see the amount
recorded for each sale. No customer is going to be willing to pay USD 1.75 when the employee rings up USD
1.00.
• The cash register tapes should be inaccessible to the employees. The manager (and possibly assistant
manager) should have the only keys to the cash registers.
• Pay the employees a competitive wage.

• Require that all sales be rung up immediately after the sale.
• The manager or assistant manager should reconcile the cash register tapes at the end of each day.
a. Solution to demonstration problem B
CARR COMPANY
Bank Reconciliation
2010 March 31
Balance per bank statement, 2010 March 31 $4,450.00
Add: Deposit in transit $1,300.00
Check charged in error 200.00 1,500.00
$5,950.00
Less: Outstanding checks 1,050.00
Adjusted balance, 2010 March 31 $4,900.00
Balance per ledger, 2010 March 31 $4,459.00
Add: Note collected $1,000.00
Interest earned on checking account 20.00
Error in recording customer's check 13.50 1,033.50
$5,492.50
Less: Service and collection charges $10.00
NSF check 75.00
Carr Company noted charged against account 507.50 592.50
Adjusted balance, 2010 March 31 $4,900.00
b.
Mar. 31 Cash 441.00
Bank Service Charge Expense 10.00
Accounts Receivable 75.00
Notes Payable 507.50
Notes Receivable 1,000.00
Interest Revenue 20.00
Accounts Receivable 13.50
To record adjustments to Cash account
Alternatively:
Mar. 31 Cash 1,033.50
Notes Receivable 1,000.00
Interest Revenue 20.00

Accounting Principles: A Business Perspective 358 A Global Text