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Chapter 7: Q3TI (page 390)

Fill in the missing information.

a. The vendor ships the inventory and sends a(n) __________ back to the purchaser.

b. After approving all documents, the purchaser sends a(n) __________ to the vendor.

c. When ordering merchandise inventory, the purchaser sends a(n) __________ to the vendor.

d. The purchaser receives the inventory and prepares a(n) __________.

Short Answer

Expert verified

In the first part, the blank space is filled with invoice.

Step by step solution

01

Definition of invoice

An invoice is a document that is sent by the vendor to the purchaser. The invoice contains the details about the order.

02

The blank space filled with

  1. After the shipping of the inventory the vendor sends an invoice to the purchaser.
  2. After approving all the documents, the purchaser makes the payment by sending a check.
  3. When ordering the merchandise inventory, the purchaser sends a purchase order to the vendor.
  4. After receiving inventory the purchaser prepares a receiving report.

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Most popular questions from this chapter

Defining internal control

Internal controls are designed to safeguard assets, encourage employees to follow company policies, promote operational efficiency, and ensure accurate accounting records.

Requirements

1. Which objective do you think is most important?

2. Which objective do you think the internal controls must accomplish for the business to survive? Give your reason.

Match the accounting terminology to the definitions.

1. Sarbanes-Oxley Act

2. Internal control

3. Encryption

4. Separation of duties

5. Internal auditors

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d. Requires companies to review internal control and take responsibility for the accuracy and

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e. Dividing responsibilities between two or more people.

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What is the cash ratio as of December 31, 2018, for Scott Sun & Shade?

Accounting for petty cash transactions

On June 1, Fab Salad Dressings creates a petty cash fund with an imprest balance of

\(300. During June, Al Franklin, the fund custodian, signs the following petty cash tickets:

Petty Cash

Ticket Number Item Amount

101 Office supplies \) 30

102 Cab fare for executive 20

103 Delivery of package across town 50

104 Business dinner 40

105 Merchandise inventory 90

On June 30, before replenishment, the fund contains these tickets plus cash of \(90.

The accounts affected by petty cash payments are Office Supplies, Travel Expense,

Delivery Expense, Entertainment Expense, and Merchandise Inventory.

Requirements

1. Explain the characteristics and the internal control features of an imprest fund.

2. On June 30, how much cash should the petty cash fund hold before it isreplenished?

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The petty cash custodianreplenished the fund and recorded the expenses.

Prepare the journal entries.
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