ACCT FINAL, Chapter 7

Cardinal Company s bank statement showed a balance at May 31 of $180,974. The only reconciling items consisted of a large number of outstanding checks totaling $51,847. At May 31, what balance should Cardinal's Cash account show?

$129,127. ($180,974 - $51,847 = $129,127)

The accounting records of Golden Company showed cash of $15,250 at June 30. The balance per the bank statement at June 30 was $15,125. The only reconciling items were deposits in transit of $3,200, outstanding checks totaling $4,100, an NSF check for $1,000 returned by the bank which Golden had not yet charged back to the customer, and a bank service charge of $25. The preparation of the bank reconciliation should indicate that Golden's adjusted cash balance at June 30 is:

$14,225. ($15,250 - $25 - $1,000 = $14,225)

A bank statement shows a balance of $8,445 at June 30. The bank reconciliation is prepared and includes outstanding checks of $2,790, deposits in transit of $1,350, and a bank service charge of $30. Among the paid checks returned by the bank was check no. 900 in the amount of $600, which the company had erroneously recorded in the accounting records as $60. The "adjusted cash balance" at June 30 is:

$7,005. ($8,445 - $2,790 + $1,350 = $7,005)

Which of the following is not considered a cash equivalent?

Accounts receivable

With a line of credit, a liability arises:

As soon as any money is borrowed.

Which of the following items on a bank reconciliation may not have been known to the depositor until the bank statement had arrived?

Bank service charges. A credit for interest earned. An NSF check.

When short-term investments appear in the balance sheet at their current market values, it is an exception to the ______ principle.

Cost

Each of these categories of assets is normally shown in the balance sheet at current value, except:

Inventories.