Chapter 8

Minor Company had checks outstanding totaling $5,070 on its April bank reconciliation. In May, Minor Company issued checks totaling $41,181. The May bank statement shows that $25,971 in checks cleared the bank in May. A check of $697 from one of Minor Company's customers was also returned marked "NSF." The amount of outstanding checks on Minor Company's May bank reconciliation should be

$20,280

Gunnar Company gathered the following reconciling information in preparing its September bank reconciliation. Cash balance per company records, September 30 $2,750 Deposits in transit 200 Notes receivable and interest collected by bank 630 Bank charge for check printing 50 Outstanding checks 1,250 NSF check 290 Determine the adjusted balance on September 30.

$3,040

Gunnar Company gathered the following reconciling information in preparing its September bank reconciliation. Cash balance per company records, September 30 $3,076 Deposits in transit 565 Notes receivable and interest collected by bank 769 Bank charge for check printing 35 Outstanding checks 1,309 NSF check 148 Determine the adjusted balance on September 30.

$3,662

Minor Company had checks outstanding totaling $19,200 on its April bank reconciliation. In May, Minor Company issued checks totaling $64,900. The May bank statement shows that $47,600 in checks cleared the bank in May. A check of $300 from one of Minor Company's customers was also returned marked "NSF." The amount of outstanding checks on Minor Company's May bank reconciliation should be

$36,500

Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation. Determine the adjusted balance on May 31. Cash balance per company records, May 31 $3,583 Deposits in transit 259 Notes receivable and interest collected by bank 753 Bank charge for check printing 35 Outstanding checks 1,971 NSF check185

$4,116

Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation. Determine the adjusted balance on May 31. Cash balance per company records, May 31 $5,400 Deposits in transit 375 Notes receivable and interest collected by bank 650 Bank charge for check printing 40 Outstanding checks 2,400 NSF check 140

$5,870

Consider the following information taken from the cash account. Assume cash payments were 80% of collections. Cash ?? Beginning balance $115,375 Deposits ?? Checks $80,275 Ending balance ?? How much was the beginning balance of the cash account?

$57,200

Jamison Company gathered the following reconciling information in preparing its June bank reconciliation. Cash balance per bank, June 30 $10,489 Note receivable collected by bank 5,741 Outstanding checks 7,088 Deposits in transit 5,546 Bank service charge 196 NSF check 2,944 Determine the cash balance per company records (before adjustment) on June 30.

$6,346

Jamison Company gathered the following reconciling information in preparing its June bank reconciliation. Cash balance per bank, June 30 $13,000 Note receivable collected by bank 4,000 Outstanding checks 7,000 Deposits in transit 2,500 Bank service charge 35 NSF check 1,900 Determine the cash balance per company records (before adjustment) on June 30

$6,435

Thompson Company gathered the following reconciling information in preparing its October bank reconciliation. Cash balance per bank, October 31 $14,120 Note receivable collected by bank 3,202 Outstanding checks 8,218 Deposits in transit 5,003 Bank service charge 200 NSF check 2,477 Determine the cash balance per company records (before adjustment) on October 31.

$10,380

Thompson Company gathered the following reconciling information in preparing its October bank reconciliation. Cash balance per bank, October 31 $17,000 Note receivable collected by bank 4,800 Outstanding checks 6,500 Deposits in transit 3,000 Bank service charge 50 NSF check 2,300 Determine the cash balance per company records (before adjustment) on October 31.

$11,050

Savannah Company gathered the following reconciling information in preparing its October bank reconciliation. Balance per bank $16,750 Balance per company records 16,125 Bank service charges 80 Deposit in transit 2,195 NSF check 950 Outstanding checks 3,850 Determine the adjusted balance on October 31.

$15,095

Which of the following reflects a weak internal control system?

A single employee is responsible for collecting and recording cash.

A minimum cash balance required by a bank is called

a compensating balance

The amount of deposits in transit is included on the bank reconciliation as a(n)

addition to the balance per bank statement

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the company. This item is a(n)

addition to the balance per company's records

Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. This item would be included on the bank reconciliation as a(n)

addition to the balance per company's records

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. This item would be included on the bank reconciliation as a(n)

addition to the balance per the company's records

The amount of cash to be reported on the balance sheet at June 30 is the

adjusted balance appearing in the bank reconciliation for June 30

A voucher is usually supported by

all of the above) a supplier's invoice, a purchase order, and a receiving report

The debit balance in Cash Short and Over at the end of an accounting period is reported as

an expense on the income statement

A bank reconciliation should be prepared periodically because

any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected

The cash account in the company's ledger is a(n)

asset with a normal debit balance

The type of account and normal balance of Petty Cash is a(n)

asset, debit

Journal entries based on the bank reconciliation are required in the company's accounts for

book errors

EFT

can process certain cash transactions at less cost than using the mail would incur

Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called

cash controls

A debit or credit memo describing entries in the company's bank account may be enclosed with the bank statement. An example of a credit memo is

collection of a note receivable for the company

Which of the following is not an element of internal control?

cost-benefit considerations

A $135 petty cash fund has cash of $18 and receipts of $120. The journal entry to replenish the account would include a

credit to Cash Short and Over for $3

A $162 petty cash fund has cash of $15 and receipts of $155. The journal entry to replenish the account would include a

credit to Cash Short and Over for $8

A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. What entry is required in the company's accounts?

debit Accounts Payable; credit Cash

Accompanying the bank statement was a debit memo for an NSF check received from a customer. What entry is required in the company's accounts?

debit Accounts Receivable; credit Cash

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. What entry is required in the company's accounts?

debit Cash; credit Accounts Payable

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the customer. What entry is required in the company's accounts?

debit Cash; credit Notes Receivable and Interest Revenue

Accompanying the bank statement was a debit memo for bank service charges. What entry is required in the company's accounts?

debit Miscellaneous Expense; credit Cash

A $150 petty cash fund has cash of $54 and receipts of $83. The journal entry to replenish the account would include a

debit to Cash Short and Over for $13

A $112 petty cash fund has cash of $24 and receipts of $84. The journal entry to replenish the account would include a

debit to Cash Short and Over for $4

The amount of the outstanding checks is included on the bank reconciliation as a(n)

deduction from the balance per bank statement

Accompanying the bank statement was a debit memo for an NSF check received from a customer. This item would be included on the bank reconciliation as a(n)

deduction from the balance per company's records

Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is a(n)

deduction from the balance per company's records

A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. This item would be included in the bank reconciliation as a(n)

deduction from the balance per the company's records

Which of the following items that appeared on the bank reconciliation did not require a journal entry?

deposits in transit

Which of the following would be subtracted from the balance per company records on a bank reconciliation?

error in recording a check issued for $732 as $723

Entries are made to the petty cash account when

establishing the fund

Internal control does not consist of policies and procedures that

guarantee the company will earn a profit

A necessary element of internal control is

information and communication

When there are major changes in a company's strategy, business structure, or operations, evaluations of controls are usually performed by

internal auditors

The bank reconciliation

is part of the internal control system

Cash equivalents include

money market accounts and commercial paper

A firm's internal control environment is not influenced by

monitoring policies

What entry is required in the company's accounts to record outstanding checks?

no entry required

Which of the following would be added to the balance per company records on a bank reconciliation?

notes collected by the bank

Which of the following would be subtracted from the balance per bank on a bank reconciliation?

outstanding checks

During a bank reconciliation process,

outstanding checks are subtracted and deposits in transit are added to the bank statement balance

Which of the following should not be considered cash by an accountant?

postage stamps

Which of the following is not a factor that influences a business's control environment?

proofs and security measures

The objectives of internal control are to

provide reasonable assurance that assets are safeguarded and used for business purposes, financial reports are accurate, and laws and regulations are complied with

Sarbanes-Oxley applies to

publicly held companies

The portion of an invoice that is returned with payment is a

remittance advice

An element of internal control is

risk assessment

Which of the following would be deducted from the balance per company records on a bank reconciliation?

service charges

Credit memos from the bank

show that the bank has collected a note receivable for the customer

A bank statement

shows the activity that increased or decreased the company's account balance

In the normal operation of business, you receive a check from a customer and deposit it into your checking account. With your bank statement, you are advised that this check for $775 is "NSF." The bank also informs you that due to the amount of activity on your business account the monthly service charge is $75. During a bank reconciliation, you will

subtract both values from the cash balance according to the company's records

A bank reconciliation should be prepared

to explain any difference between the balance per company records with the balance per bank records

The debit made in the journal to reimburse the petty cash fund is to

various accounts for which the petty cash was disbursed

A special form on which is recorded pertinent data about a liability and the particulars of its payment is called a(n)

voucher

Cash equivalents

will be converted to cash within 90 days

A $200 petty cash fund has cash of $20 and receipts of $177. The journal entry to replenish the account would include a credit to

Cash for $180

"To maintain public confidence and trust in the financial reporting of companies" is the purpose of

Sarbanes-Oxley