Accounting 201

At the end of business on September 1, the total displayed on the cash register tape shows $1,059 of cash sales for the day. However, when the clerk and the supervisor count the cash in the register, the count reveals that $1,050 was actually collected from customers. Complete the following journal entry by selecting the account names and dollar amounts from the drop-down menus.

(D) Cash $1050 (D) Cash Over and Short $9 (C)Sales $1059

The company's bank reconciliation at June 30 included the following item. The bank statement included a credit memorandum in the amount of $150 for interest. Complete the necessary journal entry by selecting the account names and dollar amounts from the drop-down menus.

(D) Cash $150 (C) Interest Revenue $150

On February 1, Derrick Company establishes a $200 petty cash fund. Complete the seller's necessary journal entry by selecting the account names and dollar amounts from the drop-down menus.

(D) Petty Cash $200 (C) Cash $200

Recall on February 1, Derrick Company established a $200 petty cash fund. On February 15, when the fund balance reached $7, the petty cash custodian prepared a petty cash report that summarized receipts for postage ($140) and printing ($54). Complete the seller's necessary journal entry by selecting the account names and dollar amounts from the drop-down menus.

(D) Printing Expense $140 (D) Postage Expense $54 (C) Cash Over and Short $1 (C) Cash $193

A good system of internal control for cash provides adequate procedures for protecting both cash receipts and cash disbursements. Identify which one of following statements is true regarding this protection. A basic guideline for safeguarding cash is to separate the duties of those who have custody of cash from those who keep cash records. A voucher system of control is a control system exclusively for cash receipts. A petty cash system is not a control procedure for safeguarding cash. A basic guideline for safeguarding cash is that all cash receipts be deposited weekly or monthly.

A basic guideline for safeguarding cash is to separate the duties of those who have custody of cash from those who keep cash records.

The following information is available for the Maribel Company for the month of June: The unadjusted balance of the company's Cash account was $26,620 at the end of June. The bank statement shows a balance on June 30 of $26,960. Outstanding checks totaled $4,000 at June 30. Deposit in transit totaled $3,000 on June 30. The bank statement included a credit memorandum in the amount of $150 for interest. Check #1221 (in payment of account payable) was written for $4,900, but recorded in the accounting records as $4,090. Select the appropriate items to complete the bank reconciliation.

Maribel June 30 BS balance Book balance Opening balance $26,960 $26,620 Add Dtransit $3K Interest $150 Deduct OC $4K ERROR $810 Adjusted BB $25,960 $25,960

All of the following statements regarding a voucher system are incorrect except _____. -all companies use the same standardized voucher system -an invoice approval initiates the recording of a purchase -for control purposes, department managers may place orders directly with suppliers in a well-designed voucher system -a voucher system is commonly used in small companies to compensate for the lack of other internal controls -a well-designed voucher system will prevent all errors and fraud

an invoice approval initiates the recording of a purchase

When the company's bank reconciliation was prepared, one of the adjustments to the balance per books included an NSF check in the amount of $75 (that was received from a customer in payment of her account). The journal entry to record this item includes a _____.

debit to Accounts Receivable in the amount of $75

Separation of duties _____.

divides responsibility for a transaction between two or more individuals

The principles of internal control include _____.

establish responsibilities

An effective system of internal control _____.

helps protect company assets

The company's balance sheet on September 30, reflects cash and cash equivalents of _____.

$109,500 Currency and coins on hand of $12,500 + Checking account balance of $35,000 + Customer checks on hand (not yet deposited) of $2,000 + Money market fund balance of $50,000 + Investment in 3-month U.S. Treasury bills of $10,000 = Total cash and cash equivalents of $109,500. The investment in Microsoft common stock does not meet the criteria for a cash equivalent, which is a short-term, highly liquid investment asset that is readily convertible to a known cash amount and sufficiently close to its due date so that its market value is not sensitive to interest rate changes.

The company's bank reconciliation on June 30 included check #1221 (in payment of an account payable) written for $4,900, but recorded in the accounting records as $4,090. Complete the seller's necessary journal entry by selecting the account names and dollar amounts from the drop-down menus.

(D) Accounts Payable $810 (C) Cash $810

Because its petty cash fund was depleted so quickly, on February 16, Derrick Company decided to increase the petty cash fund from $200 to $350. Complete the seller's necessary journal entry by selecting the account names and dollar amounts from the drop-down menus.

(D) Petty Cash $150 (C) Cash $150

The company's days' sales uncollected is closest to _____.

53.7 days Days' sales uncollected = Ending Accounts Receivable of $125,000 / Net Sales of $850,000 x 365 = 53.7 days

The _____ Category includes currency and coins along with amounts on deposit in bank accounts, checking accounts, and savings accounts.

Cash

The term _________ refers to a company's ability to pay for its near-term obligations.

Liquidity

The company's bank reconciliation on June 30 included deposits in transit that totaled $3,000 on June 30. Does the company need to prepare a journal entry relating to this item to adjust the book balance to the correct balance?

NO

The company's bank reconciliation on June 30 included outstanding checks that totaled $4,000 at June 30. Does the company need to prepare a journal entry relating to this item to adjust the book balance to the correct balance?

NO

Cash management principles include all of the following except _____.

maximize other assets

The company's bank reconciliation on June 30 included a credit memorandum in the amount of $150 for interest. Does the company need to prepare a journal entry relating to this item to adjust the book balance to the correct balance?

YES

The company's bank reconciliation on June 30 included check #1221 (in payment of an account payable) written for $4,900, but recorded in the accounting records as $4,090. Does the company need to prepare a journal entry relating to this item to adjust the book balance to the correct balance?

YES

A bank does not issue a debit memorandum to notify a depositor of _____. -a deduction to a depositor's account -a deposit to the depositor's account -a withdrawal through an ATM -a check that was deposited in the account but was returned NSF -periodic payments arranged in advance, by a depositor

a deposit to the depositor's account

An internal control system consists of the policies and procedures managers use to _____. -ensure reliable accounting -protect assets -promote efficient operations -uphold company policies -all of the above

all of the above

The ________ Category includes short-term, highly liquid investment assets that are readily convertible to a known cash amount and sufficiently close to their due dates so that their market value is not sensitive to interest rate changes.

cash equivalents

The Sarbanes-Oxley Act _____.

requires managers of public companies to document and assess the effectiveness of all internal control processes that impact financial reporting