Exercise 6-15A Determining the amount of petty cash expense
Consider the following events:
- A petty cash fund of $200 was established on April 1, Year 1.
- Employees were reimbursed when they presented petty cash vouchers to the petty cash custodian.
- On April 30, Year 1, the petty cash fund contained vouchers totaling $196.50 plus $2.20 of currency.
Required
Answer the following questions:
a. How did the establishment of the petty cash fund affect (increase, decrease, or have no effect on) total assets?
b. What is the amount of total petty cash expenses to be recognized during April?
c. When are petty cash expenses recognized (at the time of establishment, reimbursement, or replenishment)?
Exercise 6-16A Confidentiality and the auditor
Suzanne Hurley discovered significant fraud in the accounting records of a high-profile client. Due to her client’s prestige, the story aired in the mainstream media. Unable to resolve her client’s remaining concerns with the company’s management team, Hurley ultimately resigned from the audit engagement. She knows she will be asked by several interested parties, including her friends and relatives, the successor auditor, and the prosecuting attorneys in a court of law, to tell what she knows. She has asked you for advice.
Required
Write a memo that explains Hurley’s disclosure responsibilities to each of the interested parties.
Senior lecturer at University. 12+ years tutoring algebra and calculus..