BA 111 Chapter 6

Jim Rodgers endorsed a check by signing his name on the back of the left side of the check. This kind of endorsement is called:

Blank endorsement A signature on the back-left side of a check of the person or firm the check is payable to is a blank endorsement

How is a list of deposits in transit prepared?

By comparing the deposits on the bank statemnet to the deposits in the checkbook register To determine deposits in transit you compare deposits recorded on the bank statement to deposis that are documented in the checkbook register.

The credit recorded in the journal entry to establish the petty cash fund is to:

Cash To establish a petty cash fund, one would debit petty cash and credit cash.

The ABA code on a check tells you the :

City or state of the bank The ABA code which is found in the upper-right corner of each check identifies the large city or state in which the bank is located and identifies the bank, the federal reserve bank district, and the routing number used by the Federal Reserve Bank.

First City National bank issue a $5,000 credit memorandum to Mac's Auto Service Centers of America when the bank:

Collected a not receivable from a customer If the bank acts as a collecting agent for a business in collecting notes, it will charge a small fee, and the ent amount collected will be added to the bank balance. The bank will send a credit memorandum verifying the increase in the depositor's balance.

A 200 pretty cash fund has cash of $50 and valid receipts for $150. The entry to replenish the fund would include a:

Credit to cash for $150

A customer pays with a credit card upon the purchase of a $2,000. The credit card company charges a 1.5% service charge. Which of the following entries would record properly the sale?

Debit cash$1,970; debit service charge $30; credit sales $1,970 A credit card sale is a cash sale but the service charge needs to be deducted and recognized as an expense.

When the petty cash expense receipts plus the coin and currency in the petty cash lockbox are less than the amount that established the fund, which account entry would be made:

Debit to cash short and over All shortages will be recorded as debits and all overages will be recorded as credits. This account is temporary. If the ending balance of the account is a debit (a shortage), it i considered a miscellaneous expense that would be reported on the income statement. If the balance of the account is a credit (an overage), it is considered as miscellaneous income reported o the income statement.

A requirement that all checks written have proper authorization and _______ is and example of an internal control _______.

Documentation; procedure Internal controls are procedures and methods to control a firm's assets as well as monitor its operations.

The name of the bank on the face of the check is referred as the:

Drawee

Which of the following would be added o the balance over books on a bank reconciliation?

Interest earned on a checking account

A no sufficient funds check was returned to your company. How does the bank treat this on your bank statement?

It is shown as a debit memo. An NSF (non-sufficient funds)check is a check that has been returned because the drawer did not have enough money in its account to pay the check. Think of a debit memorandum as a deduction from the account holder's balance.

The debit recorded in the journal entry to establish the petty cash fund is to:

Petty cash

The entry to replenish the petty cash fund debited delivery expense for $50 and postage for $75 however bother expenditures were for delivery. This would cause:

Postage's expense to be overstated When replenishing petty cash, expenses for expenditures from petty cash are recognized. By debiting postage instead of delivery expense, postage was overstated.

Jim Rodgers is the treasurer of ABC In's. He receives a check from a customer and endorses it as follows: Pay to the order of Giant Bank for deposit only. ABC Ins. What type of enforcement has Jim executed?

Restrictive A restrictive endorsement is the safest for limits any further use of the check. It can only be deposited in the specified account.

U.S National Banking sends a credit memorandum of $14,975 to Pan Servings Inc., verifying the increase in the company's balance, What is plausible explanation of this?

The bank acts as a collecting agent for Pan Servings and collected a $15,000 note and deducted a charge a $25 fee for the service with the net amount collected and added to the bank balance.

Manger is reconciling the checking account and has noted that $12,000 of checks are still outstanding checks. Which of the following is true?

The checks have not been presented for payment even though they have been deducted from the checkbook. Outstanding checks have not been presented to the back for payment, but have been subtracted in the checkbook. Outstanding checks are checks written by a company or person that were not received or not processed by the bank before the preparation of the bank statement.

A petty cash fund is set up:

To pay for small expenses. A petty cash fund allows payment of small amounts without the writing of checks.

Endorsing a check:

Transfers the right to deposit or transfer cash. Endorsement is the signing or stamping of one's name on the back left-hand side fo the check. This signature means that the payee as transferred the right to deposit or cash the check to someone else (the bank).