24) A petty cash fund was established with a $200 balance. It currently has cash of $35 and petty cash
tickets as follows: Office expense $130 and Entertainment Expense $50. Which of the following would be
included in the journal entry to replenish the Petty Cash fund?
A) debit to Cash Short & Over for $20
B) credit to Cash Short & Over for $15
C) credit to Cash Short & Over for $20
D) debit to Cash Short & Over for $15
25) The petty cash fund at Brookshire Company has a designated balance of $350. The fund currently
holds $126 in cash and $226 in petty cash tickets. Based on this information, which of the following
statements is correct?
A) The total of the cash on hand plus petty cash tickets equals the designated fund balance.
B) A shortage of $2 exists.
C) To replenish the petty cash fund, the company must write a check, payable to Petty Cash, for $226.
D) The petty cash fund custodian must locate the $2 discrepancy.
26) A petty cash fund was established with a $250 balance. It currently has cash of $38 and petty cash
tickets totaling $212 for travel expense. Prepare the journal entry to record the replenishment of the fund.
Omit explanation.
27) A petty cash fund was established with a $300 balance. It currently has cash of $73 and petty cash
tickets totaling $222 for travel expense. Prepare the journal entry to record the replenishment of the fund.
Omit explanation.
28) If the amount of the petty cash fund is decreased, the Petty Cash Fund account should be credited.
29) Atlas Service Company decides to increase the amount of the petty cash fund from $300 to $850. A
journal entry must be made to debit the Cash account and credit the Petty Cash account for $550.
30) The only time the Petty Cash account is used in a journal entry is when the account is established,
increased, or decreased.
31) The petty cash fund has a current balance of $350, which is the established fund balance. Based on
activity in the fund, it is determined that the balance needs to be changed to $400. Which journal entry is
needed to make this change?
A) Debit the Petty Cash account and credit the Cash account for $400.
B) No journal entry is needed because this change only involves cash.
C) Debit the Petty Cash account and credit the Cash account for $50.
D) Debit the Cash account and credit the Petty Cash account for $50.
32) Prepare the journal entries for the following petty cash transactions of Williamson Dental Supplies.
Omit explanations.
Aug. 1
Established a petty cash fund with a $200 balance.
Aug. 31
The petty cash fund has $43 in cash and $154 in petty
cash tickets there were issued to pay for Office Expense
($75) and Repair Expense ($79). Replenished the fund
and recorded the expenditures.
Oct. 15
Increased the balance of the petty cash fund to $250.
Petty Cash
Cash
Aug. 31
Office Expense
Repair Expense
Cash Short & Over
Petty Cash
Cash
33) Prepare the journal entries for the following petty cash transactions of City Coffee Shop. Omit
explanation.
Sept. 10
Established a petty cash fund with a $300 balance.
Sept. 30
The petty cash fund has $105 in cash and $200 in petty
cash tickets there were issued to pay for Delivery Expense
($115) and Postage Expense ($85). Replenished the fund
and recorded the expenditures.
Oct. 15
Decreased the balance of the petty cash fund to $250.
Cash
Cash Short & Over
Cash
2) Debit cards offer the customer the convenience of buying something without having to pay cash
immediately.
3) Debit cards reduce the customer’s bank account immediately but allow the customer to pay
electronically instead of with currency or writing a check.
4) Companies process credit and debit card transactions internally.
5) Sales through credit cards and debit cards are journalized in the same way as sales on account.
6) Proceeds from credit and debit card transactions are deposited on the day of the actual sale.
7) The two common methods of processing credit and debit card transactions are gross and net.
8) Regarding the gross method of handling credit and debit card transactions, which of the following
statements is correct?
A) The total sale amount is deposited on the date of the actual sale.
B) The processing fees for all transactions processed for the month are deducted from the company‘s bank
account, often on the last day of the month.
C) On the date of sale, the Sales Revenue account is credited for the amount of sale less the processing fee.
D) The journal entry on the date of sale is identical to a journal entry made for a sale on account.
9) Under the net method of handling credit and debit card payments, the ________.
A) net amount of the sale is credited to the Sales Revenue account on the date of sale
B) credit to the sales revenue is selling price less the transaction fee
C) business writes a check to the third-party processor for the processing fee
D) processing fee is debited to the Credit Card Expense account on the date of sale
10) Under the gross method, when the credit card processor deposits the cash proceeds from credit and
debit card sales, ________.
A) there will be no fee charged for the transaction
B) the deposit is made on the last day of the month
C) the total sales plus the processing fee assessed equals the net amount of cash deposited
D) the processing fees are deducted from the company’s bank account by the processor
11) Fashion Barn, Inc., a retailer, accepts payment through credit cards. During August, credit card sales
amounted to $12,000. The processor charges a 3% fee. Assume that the processor deposits the net amount.
Prepare the journal entry for credit card sales. (Ignore cost of goods sold.) Omit explanation.
12) Lane Outfitters, Inc., a retailer, accepts payment through credit cards. During August, credit card
sales amounted to $12,000. The processor charges a 3% fee. Assuming that the credit card processor uses
the gross method, prepare the journal entries, on the books of Lane Outfitters, for the credit card sales
and the payment of fees. (Ignore cost of goods sold.) Omit explanation.
1) A business keeps cash in a bank account because banks have established practices for safeguarding the
business’s money.
2) The primary reason that businesses keep their cash in a bank account is the ability to earn interest.
3) Cash is the most liquid asset reported on the balance sheet because it is the medium of exchange.
4) A signature card is a card that shows each authorized person’s signature for a bank account.
5) Which one of the following is true of a signature card?
A) It shows each authorized person’s signature for a bank account.
B) It is the same as a deposit receipt and acts as a proof of the deposit transaction.
C) It can be used as a debit card.
D) It can only be used for bank accounts of individuals, not for the bank accounts of businesses.
6) As proof of the deposit transaction, a customer receives a canceled check from the bank.
7) A deposit ticket is a document that instructs a bank to pay the designated person a specified amount of
money.
8) A deposit receipt is ________.
A) retained by the customer as proof of a deposit transaction
B) the same as a signature card
C) used by the bank as an alternative to a remittance advice
D) given by the customer to the bank as a proof of deposit
9) The payee is the issuer of a check.
10) The party who issues a check is the maker.
11) There are three parties to a check: the depositor, the maker, and the bank.
12) In addition to the account number, a check shows the 9-digit routing number.
13) When a check is issued, the party being paid the cash is referred to as the ________.
A) payee
B) maker
C) bank signatory
D) depositor
14) When a check is issued, the party who is paying the cash is referred to as the ________.
A) payee
B) maker
C) bank signatory
D) depositor
15) The bank’s routing number ________.
A) contains 10 digits
B) identifies the bank upon which the payment is drawn
C) includes the account number of the business
D) is not shown on the check