ACG Ch 7
Springer Company listed outstanding checks totaling $4,500 on its September bank reconciliation. In October, the company issued checks totaling $45,700. The October bank statement shows that checks totaling $39,800 cleared the bank. In addition, a check from one of Springer's customers in the amount of $500 was returned as NSF. The outstanding checks on the October bank reconciliation should total
$10,400 (Beginning outstanding checks (from September), $4,500 Add: Checks issued during October, $45,700 Less: Checks that cleared the bank during October, ($39,800) Ending outstanding check, $10,400)
Which of the following would be added to the balance per books on a bank reconciliation?
Notes collected by the bank
Kappa Company gathered the following reconciling information in preparing its September bank reconciliation: Cash balance per books, Sep. 30, $10,400 Deposits in transit, $900 Outstanding checks, $2,000 NSF check, $280 Notes receivable and interest collected by bank, $480 Bank charge for check printing, $50 The adjusted cash balance per books on September 30 is
$10,550 (Balance per books on October 31, $10,400 Add: Note collected by the bank, $480 Less: Bank service charge, ($50) Less: Customer's NSF check, ($280) Adjusted cash balance per books on October 31, $10,550)
At June 30, Kingman Company has the following bank information: Cash balance per bank, $11,500 Outstanding checks, $1,375 Deposits in transit, $600 Notes receivable collected by bank, $250 Bank service charge, $50 NSF check, $125 What is the company's adjusted cash balance at the end of June?
$10,725 (Cash per bank, 11,500 Add: Deposits in transit, 600 Less: Outstanding checks, (1,375) Adjusted cash balance, 10,725)
Jones Company collected the following information to prepare its August bank reconciliation: Cash balance per books, August 31, $9,400. Deposits in transit, $1,100. Notes receivable with interest collected by bank, $2,500. Bank service charges, $50. Outstanding checks, $1,450. NSF check, $400. How much is the adjusted cash balance per books on August 31?
$11,450 (The book side of the cash reconciliation begins with $9,400 to which amounts collected by the bank are added (e.g., the note receivable of $2,500) and amounts the bank deducted from the account are subtracted (e.g., the bank service charges of $50 and the NSF check of $400) to arrive at the adjusted cash balance per books of $11,450. Outstanding check and deposits in transit affect the bank side of the reconciliation. Alternatively: Balance per books on August 31, $9,400 Add: Note collected by the bank, $2,500 Less: Bank service charge, ($50) Less: customer's NSF check, ($400) Adjusted cash balance per books on August 31, $11,450)
At April 30, Kessler Company has the following bank information: Cash balance per bank, $11,500 Outstanding checks, $700 Deposits in transit, $1,375 Credit memo for interest, $25 Bank service charge, $50 What is Kessler's adjusted cash balance on April 30?
$12,175 (Cash per bank, 11,500 Add: Deposits in transit, 1,375 Less: Outstanding checks, (700) Adjusted cash balance. 12,175)
Barker Company collected the following information to prepare its April bank reconciliation: Cash balance per bank, April 30, $13,500. Note receivable of $5,200 plus $300 of interest collected, $5,500. Outstanding checks, $3,500. Deposits in transit, $4,100. Bank service charges, $50. NSF check, $600. How much is the adjusted cash balance per bank on April 30?
$14,100 (Balance per bank on April 30, $13,500 Add: Deposits in transit, $4,100 Less: Outstanding checks, ($3,500) Adjusted cash balance per bank, $14,100)
Higgins Company gathered the following reconciling information in preparing its October bank reconciliation: Cash balance per books, Oct. 31, $12,600 Bank charge for check printing, $60 Outstanding checks, $6,000 NSF check, $510 Deposits in transit, $450 Notes receivable and interest collected by bank, $2,550 The adjusted cash balance per books on October 31 is
$14,580 (Balance per books on October 31, $12,600 Add: Note collected by the bank, $2,550 Less: Bank service charge, ($60) Less: Customer's NSF check, ($510) Adjusted cash balance per books on October 31, $14,580)
A check correctly written by the company for $257 was incorrectly recorded by that same company as $275. On the bank reconciliation
$18 should be added to the cash balance per books
Springer Company listed outstanding checks totaling $4,800 on its September bank reconciliation. In October, the company issued checks totaling $22,100. The October bank statement shows that checks totaling $23,200 cleared the bank. In addition, a check from one of Springer's customers in the amount of $2,000 was returned as NSF. The outstanding checks on the October bank reconciliation should total
$3,700 (Beginning outstanding checks (from September), $4,800 Add: Checks issued during October, $22,100 Less: Checks that cleared the bank during October, ($23,200) Ending outstanding check, $3,700)
Barker Company collected the following information to prepare its July bank reconciliation: Cash balance per bank, July 31, $48,200. Note receivable of $3,800 plus $200 of interest collected, $4,000. Outstanding checks, $7,100. Deposits in transit, $2,700. Bank service charges, $50. NSF check, $500. How much is the adjusted cash balance per bank on July 31?
$43,800 (Balance per bank on July 31, $48,200 Add: Deposits in transit, $2,700 Less: Outstanding checks, ($7,100) Adjusted cash balance per bank, $43,800)
Omega Company gathered the following reconciling information in preparing its June bank reconciliation: Cash balance per books, Jun. 30, $5,400 Deposits in transit, $550 Outstanding checks, $2,500 NSF check, $320 Notes receivable and interest collected by bank, $950 Bank charge for check printing, $65 The adjusted cash balance per books on June 30 is
$5,965 (Balance per books on October 31, $5,400 Add: Note collected by the bank, $950 Less: Bank service charge, ($65) Less: Customer's NSF check, ($320) Adjusted cash balance per books on October 31, $5,965)
Double Company collected the following information to prepare its June bank reconciliation: Cash balance per bank, June 30, $67,300. Note receivable of $2,500 plus $250 of interest collected, $2,750. Outstanding checks, $17,100. Deposits in transit, $12,900. Bank service charges, $50. NSF check, $500. Double Company erroneously recorded a $560 cash payment on its books as a $650 cash payment. Also, the bank erroneously added $500 to Double Company's checking account. The bank should have added the money to a different customer's account. How much is the adjusted cash balance per bank on June 30?
$62,600 (Balance per bank on Jun. 30, $67,300 Add: Deposits in transit, $12,900 Less: Outstanding checks, ($17,100) Less: Bank error (see note below), ($500) Adjusted cash balance per banks, $62,600)
Double Company collected the following information to prepare its November bank reconciliation: Cash balance per bank, November 30, $66,200. Note receivable of $2,500 plus $250 of interest collected, $2,750. Outstanding checks, $14,700. Deposits in transit, $12,900. Bank service charges, $50. NSF check, $1,500. Double Company erroneously recorded a $560 cash payment on its books as a $650 cash payment. Also, the bank erroneously deducted $200 from Double Company's checking account. The bank should have deducted the money from a different customer's account. How much is the adjusted cash balance per bank on November 30?
$64,600 (Balance per bank on Nov. 30, $66,200 Add: Deposits in transit, $12,900 Less: Outstanding checks, ($14,700) Add: Bank error (see note below), $200 Adjusted cash balance per banks, $64,600)
Double Company collected the following information to prepare its April bank reconciliation: Cash balance per bank, April 30, $71,600. Note receivable of $1,900 plus $200 of interest collected, $2,100. Outstanding checks, $6,400. Deposits in transit, $1,500. Bank service charges, $10. NSF check, $500. Double Company erroneously recorded a $1,200 cash payment on its books as a $2,100 cash payment. Also, the bank erroneously added $1,000 to Double Company's checking account. The bank should have added the money to a different customer's account. How much is the adjusted cash balance per bank on April 30?
$65,700 (Balance per bank on Apr. 30, $71,600 Add: Deposits in transit, $1,500 Less: Outstanding checks, ($6,400) Less: Bank error (see note below), ($1,000) Adjusted cash balance per banks, $65,700)
Double Company collected the following information to prepare its September bank reconciliation: Cash balance per bank, September 30, $72,700. Note receivable of $1,700 plus $200 of interest collected, $1,900. Outstanding checks, $4,600. Deposits in transit, $2,150. Bank service charges, $50. NSF check, $450. Double Company erroneously recorded a $1,000 cash payment on its books as a $100 cash payment. Also, the bank erroneously deducted $300 from Double Company's checking account. The bank should have taken the money from a different customer's account. How much is the adjusted cash balance per bank on September 30?
$70,550 (Balance per bank on Sep. 30, $72,700 Add: Deposits in transit, $2,150 Less: Outstanding checks, ($4,600) Add: Bank error (see note below), $300 Adjusted cash balance per bank, $70,550)
Triple Company collected the following information to prepare its September bank reconciliation: Cash balance per books, September 30, $73,250. Note receivable of $4,000 plus $200 of interest collected, $4,200. Outstanding checks, $14,500. Deposits in transit, $10,250. Bank service charges, $50. NSF check, $400. Triple Company erroneously recorded a $230 cash payment on its books as a $320 cash payment. Also, the bank erroneously subtracted $750 from Triple Company's checking account. The bank should have subtracted the money to a different customer's account. How much is the adjusted cash balance per books on September 30?
$77,090 (Balance per books on Sep. 30, $73,250 Add: Note collected by the bank including interest, $4,200 Less: Bank service charge, ($50) Less: NSF check, ($400) Add: Book error (see note below), $90 Adjusted cash balance per books, $77,090)
Triple Company collected the following information to prepare its September bank reconciliation: Cash balance per books, September 30, $75,750. Note receivable of $4,200 plus $300 of interest collected, $4,500. Outstanding checks, $14,500. Deposits in transit, $10,250. Bank service charges, $50. NSF check, $500. Triple Company erroneously recorded a $320 cash payment on its books as a $230 cash payment. Also, the bank erroneously subtracted $750 from Triple Company's checking account. The bank should have subtracted the money to a different customer's account. How much is the adjusted cash balance per books on September 30?
$79,610 (Balance per books on Sep. 30, $75,750 Add: Note collected by the bank including interest, $4,500 Less: Bank service charge, ($50) Less: NSF check, ($500) Less: Book error (see note below), ($90) Adjusted cash balance per books, $79,610)
A check correctly written by West Company for $167 was incorrectly recorded on West Company's books as $176. As a result, the bank reconciliation should include
$9 added to the cash balance per books
Triple Company collected the following information to prepare its September bank reconciliation: Cash balance per books, September 30, $89,300. Note receivable of $1,900 plus $200 of interest collected, $2,100. Outstanding checks, $5,100. Deposits in transit, $3,800. Bank service charges, $50. NSF check, $600. Triple Company erroneously recorded a $200 cash payment on its books as a $2,000 cash payment. Also, the bank erroneously added $1,000 to Triple Company's checking account. The bank should have added the money to a different customer's account. How much is the adjusted cash balance per books on September 30?
$92,550 (Balance per books on Sep. 30, $89,300 Add: Note collected by the bank including interest, $2,100 Less: Bank service charge, ($50) Less: NSF check, ($600) Add: Book error (see note below), $1,800 Adjusted cash balance per books, $92,550)
For which of the following errors should the appropriate amount be added to the cash balance per bank statement on a company's bank reconciliation?
A check written by the company for $890 was incorrectly recorded by the bank as $980, A check written by the company for $60 was incorrectly recorded by the bank as $600, A deposit of $110 was incorrectly recorded by the bank as a deposit of $101
For which of the following errors should the appropriate amount be added to the cash balance per books on a company's bank reconciliation?
A deposit of $1,200 was incorrectly recorded by the company as a deposit of $120
For which of the following errors should the appropriate amount be subtracted from the cash balance per bank statement on a company's bank reconciliation?
A deposit of $470 was incorrectly recorded by the bank as a deposit of $740, A check written by the company for $300 was incorrectly recorded by the bank as $30
Which one of the following is a physical control?
Alarms to prevent break-ins
Which one of the following would not result in a bank issuing a debit memorandum?
Collection of a note receivable
Which of the following statements is false with regards to internal controls?
Companies must develop a system of internal control even if they are not publicly-traded, Stockholders are subject to fines and can be imprisoned if their company's fail to comply with internal control rules internal controls, Publicly-traded companies must eliminate redundant internal controls (The Sarbanes-Oxley Act (SOX) requires publicly-traded U.S. corporations to maintain an adequate system of internal control)
Which one of the following is not a physical control?
Conduct thorough background checks on job applicants, Rationalization, segregation of duties (conducting background checks on job applicants is a human resource control—not a physical control)
Which one of the following is a primary component of an internal control system?
Control Environment (The 5 primary components of an internal control system are (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring)
A company's monthly bank statement shows a collection of a note receivable by the bank in the amount of $250. Which of the following is one part of the journal entry needed to record the note collection by the company?
Credit to Notes Receivable for $250 (Cash will be debited for the $250 because cash is being increased (i.e., collected). Also, Notes Receivable will be credited for $250 because it is an asset that is being reduced. This transaction is merely an asset exchange of one asset for another)
A company's monthly bank statement shows a collection of a note receivable by the bank in the amount of $1,000. Which of the following is one part of the journal entry needed to record the note collection by the company?
Debit to Cash for $1,000
A NSF check should appear in which section of the bank reconciliation?
Deduction from the balance per books
Which of the following will not require an adjusting entry on the company's books as a result of a bank reconciliation?
Deposits in transit
Which of the following statements is false with regards to record-keeping for bank reconciliations?
Deposits in transit do require a journal-entry once the bank reconciliation is completed
Which of the following requires an adjusting entry on the company's books as the result of a bank reconciliation?
NSF checks
Which of the following is not an element of the fraud triangle?
Incompatible Duties
Which of the following is the adjusting entry that Max Company would journalize when Max Company's bank statement indicates that the bank collected a $1,000 non-interest bearing note receivable from one of Max's customers on Max Company's behalf?
Increase the Cash account by $1,000 and decrease the Notes Receivable account by $1,000 (The cash account increases and notes receivable decreases. This is the same transaction that would be recorded if a company directly receives a check in the mail from a customer)
Which of the following is the adjusting entry that Max Company would journalize when Max Company's bank statement indicates that the bank collected a $250 non-interest bearing note receivable from one of Max's customers on Max Company's behalf?
Increase the Cash account by $250 and decrease the Notes Receivable account by $250
Which one of the following is not an objective of a system of internal controls?
Increase the readability of the financial statements (Internal control consists of all the related methods and measures adopted within an organization to (1) safeguard its assets, (2) enhance the reliability of its accounting records, (3) increase efficiency of operations, and (4) ensure compliance with laws and regulations)
For which item below might a bank issue a credit memorandum to a depositor's account?
Interest earned (Interest earned increases the amount owed to the depositor; it increases liability of the bank and is accomplished with a credit memo)
Which one of the following statements is correct?
Internal auditors are company employees who evaluate the effectiveness of the company's system of internal control on a continuous basis
Which of the following is the correct adjusting journal entry for the bank account holder when notified of a bank debit memorandum for a monthly service charge of $25?
Miscellaneous Expense 25 Cash 25
For which of the following might a bank issue a debit memorandum to a depositor's account?
Monthly service charges
Which of the following is an element of the fraud triangle?
Opportunity (The 3 components of the fraud triangle are (1) opportunity, (2) financial pressure, and (3) rationalization)
Which one of the following is not a primary component of an internal control system?
Opportunity, Financial Pressure
Certain computer programs are used to limit unauthorized access to certain files. This is an example of
Physical controls
Joe is a warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates
Segregation of duties is violated
Which of the explicitly requires that all publicly traded companies must maintain adequate internal controls?
The Sarbanes-Oxley Act
Which of the following is not an effective internal control over cash disbursements?
The person signing the checks is the person who records cash disbursements, Requiring personnel who authorize cash disbursements to work continuously without vacations
Which of the following is not a good internal control procedure for cash?
The same individual counts the amount of cash received and records the amount of cash deposited
Which of the following controls would best help detect the removal of a blank check by an employee from the back of a company's checkbook for subsequent misappropriation of funds?
The use of pre-numbered checks
A consequence of segregation of duties is that
Theft is still possible when several employees are involved
Why should a bank reconciliation be prepared?
To explain any difference between the depositor's balance per books and the balance per bank
Which of the following is not a reason why an organization establishes a system for internal control?
To prevent a corporate take-over by a competitor, To be able to use the cash basis of accounting
All of the following are examples of internal control principles or internal control procedures except
Using customer satisfaction surveys
If a check correctly written by East Company for $628 is incorrectly recorded on East Company's books as $682, the appropriate treatment on the bank reconciliation would be to
add $54 to the cash balance per books
A check written by the company for $780 was incorrectly recorded by the bank as $870. In the bank reconciliation, this $90 error would be
added to the cash balance per bank statement
A deposit of $530 was incorrectly recorded by the bank as a deposit of $350. In the bank reconciliation, this $180 error would be
added to the cash balance per bank statement
A deposit of $530 was incorrectly recorded by the company on its books as a deposit of $350. In the bank reconciliation, this $180 error would be
added to the cash balance per books
The use of prenumbered checks is an example of
documentation procedures
A check written by the company for $650 was incorrectly recorded by the bank as $560. In the bank reconciliation, this $90 error would be
subtracted from the cash balance per bank statement
A check written by the company for $530 was incorrectly recorded on the company's books as $350. In the bank reconciliation, this $180 error would be
subtracted from the cash balance per books
A deposit of $270 was incorrectly recorded by the company on its books as a deposit of $720. In the bank reconciliation, this $450 error would be
subtracted from the cash balance per books
