Chapter 07 – Internal Control and Cash
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Easy
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-03 – LO: 07–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.15 – Current Assets Reporting
ACCT.AICPA.FN.02 – Leveraging Technology
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Technology
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
154. You are trying to explain debit and credit memos that appear on bank statements and whether these will increase or
decrease your company’s bank account balance. Complete the following table to help your new staff understand.
ITEM
Debit
or
Credit
Memo
Increases or Decreases
the Company’s Bank
Account Balance
EFT payment
Bank correction of an error due to posting another
customer’s check to your account
Service charge
Note and interest collected for our company
NSF check
Bank correction of an error recording a $250
deposit as $520
EFT deposit
ANSWER:
ITEM
Increases or
Decreases the
Company’s Bank
Account Balance
EFT payment
Decrease
Bank correction of an error due to posting
another customer’s check to your account
Increase
Service Charge
Decrease
Note and interest collected for our company
Increase
NSF check
Decrease
Bank correction of an error recording a
$250 deposit as $520
Decrease
EFT deposit
Increase
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-04 – LO: 07–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.11 – Bank Reconciliation
3247
3248
400.00
3249
309.22
3250
256.00
3251
3,212.17
3253
98.02
3254
47.55
3255
1,124.77
3256
250.00
3257
68.00
3258
215.56
3259
38.55
3261
44.61
3262
72.96
3254
47.55
3270
34.41
3255
1,124.77
3271
872.00
3256
250.00
3272
22.00
3257
68.00
3273
562.38
3258
215.56
3274
512.00
3259
38.55
3275
603.50
3260
92.65
3276
67.00
3261
44.61
3277
301.61
3262
72.96
3278
47.88
In addition to the above list of the checks, Madison had check #2264 for $32.98 and check #2655 for $45.99 outstanding
previously that have not cleared.
1. Create an outstanding checks list for Madison at the end of May.
2. What is the total amount of checks that cleared the bank (written in May)?
ANSWER:
1.
Madison Company
May 31
Outstanding Checks List
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3265
33.78
3266
756.77
3267
84.34
3268
789.00
3270
34.41
3271
872.00
3272
22.00
3273
562.38
3274
512.00
Total
$9,906.60
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-04 – LO: 07–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.11 – Bank Reconciliation
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
157. The Scharf Company is a retailer located in a state without sales tax. The following data was given to you to
complete the transactions for the day’s sales to be recorded. All cash drawers start with $100 in change.
Reg. #1
Reg. #2
Reg. #3
Reg. #4
Cash in drawer
$974.50
$1,383.66
$939.46
$1,137.91
Sales reading
$879.50
$1,298.16
$839.46
$1,030.33
Difference
Record the journal entries for EACH cash register to determine the cashier’s accuracy.
Account
Debit
Credit
ANSWER:
Each cash drawer starts with $100. This must be subtracted from the total cash in
drawer to determine the cash over/short amount.
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Page 67
160. Using the following information, prepare a bank reconciliation for Miller Co. for August 31:
(a)
The bank statement balance is $4,690
(b)
The cash account balance is $5,080.
(c)
Outstanding checks amounted to $715.
(d)
Deposits in transit are $1,020.
(e)
The bank service charge is $40.
(f)
A check for $72 for supplies was recorded as $27 in the ledger.
ANSWER:
Miller Co.
Bank Reconciliation
August 31
Cash balance according to bank statement
$4,690
Adjustments:
Deposits in transit not recorded by bank
$1,020
Outstanding checks
(715)
Total adjustments
(305)
Adjusted balance
$4,995
Cash balance according to company’s records
$5,080
Adjustments:
Bank service charge
$(40)
Error in recording
(45)
Total adjustments
(85)
Adjusted balance
$4,995
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-05 – LO: 07–05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.11 – Bank Reconciliation
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
161. Using the following information, prepare a bank reconciliation for Candace Co. for May 31:
(a)
The bank statement balance is $2,936.
(b)
The cash account balance is $3,194.
(c)
Outstanding checks amounted to $465.
(d)
Deposits in transit are $655.
(e)
The bank service charge is $50.
(f)
A check for $97 for supplies was recorded as $79 in the ledger.
ANSWER:
Candace Co.
Bank Reconciliation
May 31
Cash balance according to bank statement
$2,936
Adjustments:
Deposits in transit not recorded by bank
$655
Chapter 07 – Internal Control and Cash
DATE CREATED:
7/22/2017 6:21 PM
DATE MODIFIED:
10/16/2017 5:17 PM
POINTS:
1
Bloom’s: Applying
reconciling items:
(a)
Cash sales of $742 had been erroneously recorded in the cash receipts journal as $724.
(b)
Deposits in transit not recorded by bank, $425.
(c)
Bank debit memo for service charges, $35.
(d)
Bank credit memo for note collected by bank, $2,475 including $75 interest.
(e)
Bank debit memo for $256 NSF (not sufficient funds) check from Janice Smith, a customer.
(f)
Checks outstanding, $1,860.
ANSWER:
Farmer Co.
Bank Reconciliation
June 30
Cash balance according to bank statement
$7,735
Adjustments:
Deposits in transit not recorded by bank
$ 425
Outstanding checks
(1,860)
Total adjustments
(1,435)
Adjusted balance
$6,300
Cash balance according to company’s records
$4,098
Adjustments:
Note collected by bank, including $75 interest
$2,475
Error in recording cash sales of $742 as $724
18
NSF check from Janice Smith
(256)
Bank service charges
(35)
Total adjustments
2,202
Adjusted balance
$6,300
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.07-05 – LO: 07–05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.11 – Bank Reconciliation
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic