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210) A company establishes a $300 petty cash fund on August 3 to pay for minor cash
expenditures. The fund is replenished at the end of each month. In addition, the company has
issued credit cards for more substantial employee purchases. These credit cards are issued to
authorized managers. At the end of August, the following employee purchases have been made:
Petty Cash Fund
Credit Cards
Delivery fees
$100
Equipment
$1,400
Plumbing maintenance
70
Advertising
750
Postage
40
Supplies
360
Flowers for the office
50
$260
$2,510
Record the establishment of the petty cash fund on August 3, employee expenditures related to
the petty cash fund on August 31, and employee expenditures related to credit cards on August
31.
82
211) A company provides services on account during the current year totaling $400,000. By the
end of the year, $350,000 of this amount had been received. In addition, $75,000 was received
on account from customers for services provided in the prior year. Determine the amount of
operating cash flows the company will report as received from customers in the current year.
212) During the current year, a company provides services on account for $100,000. By the end
of the year, $60,000 of this amount had been received. In addition, cash payments for the year
were employees' salaries, $50,000; office supplies, $10,000; and utilities $20,000. Determine the
amount of operating cash flows the company will report in the current year.
213) During the current year, a company purchases equipment for $250,000, paying $50,000
immediately and promising to pay the remainder within 30 days after the end of the year.
Determine the amount of investing cash flows the company will report in the current year.
83
214) At the beginning of the current year, a company issued stock for $100,000 and borrowed
$50,000 from the bank. By the end of the year, the company had provided services of $80,000
for cash, paid employee salaries of $30,000, and paid utilities of $10,000. Determine the amount
of financing cash flows the company will report in the current year.
215) During the year, a company issues common stock for $50,000 and repays previously
borrowed amounts of $75,000. In addition, the company pays dividends of $5,000 to
stockholders. Determine the amount of financing cash flows the company will report in the
current year.
84
216) Consider the following transactions:
1. Pay employees' salaries.
2. Repay borrowing to the bank.
3. Purchase equipment with note payable.
4. Provide services to customers on account.
5. Pay dividends to stockholders.
6. Collect cash from customers for services provided.
7. Purchase supplies on account.
8. Pay for supplies purchased in transaction 7 above.
For each transaction, indicate the type of cash flow involved based on the classifications in the
statement of cash flows. If a transaction does not involve cash, write 'No Cash.'
85
217) A company had the following transactions during the year:
1. Paid rent for the next two years, $8,000.
2. Purchased office supplies on account, $2,400.
3. Purchased equipment, paying $12,000 cash and issuing a note payable for $4,000.
4. Borrowed from the bank, $6,000.
5. Paid employee salaries, $7,200.
6. Paid $2,000 on account related to transaction 2 above.
7. Paid dividends to stockholders, $2,800.
8. Sold land for $10,000 that was purchased in a prior year for $7,500.
9. Collected cash from customers for services provided, $25,700.
Calculate cash flows from operating activities, investing activities, and financing activities.
86
218) Below is a summary of all the transactions of Sampson Consulting for the month of April
2021.
Cash Transactions
Cash collections from:
Customers
$52,600
Sale of unused office furniture
11,300
Borrowing from the bank
60,000
Cash payments for:
Employee salaries
(22,500)
Office building
(74,600)
Utilities expense
(2,600)
Office supplies
(1,800)
Dividends to stockholders
(4,000)
Advertising expense
(9,800)
Noncash Transactions
Services to customers on account
11,800
Purchase supplies on account
5,800
Issue note payable for equipment
23,700
Prepare a statement of cash flows for the month of April, properly classifying each of the
transactions into operating, investing, and financing activities. The cash balance at the beginning
of April is $14,800.
88
219) At the end of March, Weber Productions' accounting records reveal a balance for cash equal
to $21,861. However, the balance of cash in the bank at the end of March is only $4,576. Weber
is concerned and asks the company's accountant to reconcile the two balances. Examination of
the bank statement and company records at the end of March reveals the following information:
NSF checks
$6,783
Service fees
$195
Deposits
outstanding
7,348
Checks
outstanding
541
In addition, Weber owes one of its suppliers $200. During March, the company's accountant
mistakenly wrote the check for $1,200. The check was recorded in the company's records for
$200 but processed by the bank for $1,200. Weber has contacted the supplier who has agreed to
send a $1,000 refund in April directly to the bank. Finally, a petty cash fund of $2,500 was
established during March. This amount was withdrawn from the checking account but not
recorded.
Required:
1. Calculate the correct ending balance of cash at the end of March.
2. Discuss any problems you see with the company's cash procedures.
90
220) On October 31, 2021, the bank statement for the checking account of Hollybuster Video
shows a balance of $11,570, while the company's records show a balance of $10,858.
Information that might be useful in preparing a bank reconciliation is as follows:
a. Outstanding checks are $1,120.
b. The October 31 cash receipts of $575 are not deposited in the bank until November 2.
c. One check written in payment of utilities for $115 is correctly recorded by the bank but is
recorded by Hollybuster as a disbursement of $155.
d. In accordance with prior authorization, the bank withdraws $500 directly from the checking
account as payment on a note payable. The interest portion of that payment is $50 and the
principal portion is $450. Hollybuster has not recorded the direct withdrawal.
e. Bank service fees of $50 are listed on the bank statement.
f. A deposit of $782 is recorded by the bank on October 13, but it did not belong to Hollybuster.
The deposit should have been made to the checking account of Videos Unlimited, a separate
company.
g. The bank statement includes a charge of $105 for an NSF check. The check is returned with
the bank statement and the company will seek payment from the customer.
Required:
1. Prepare a bank reconciliation for the Hollybuster checking account on October 31, 2021.
2. Record the necessary cash adjustments.
92
221) The cash records and bank statement for the month of July for Jim Incorporated are shown
below.
Jim Incorporated
Cash Account Records
July 1, 2021 to July 31, 2021
Cash Balance
July 1, 2021
Cash Receipts
Cash
Disbursements
Cash Balance
July 31, 2021
$7,250
$9,370
$8,950
$7,670
Cash Receipts Cash Disbursements
Date
Desc.
Amount
Date
No.
Desc.
Amount
7/9
Sales
$2,610
7/7
531
Rent
$1,400
7/21
Sales
3,340
7/12
532
Salaries
1,950
7/31
Sales
3,420
7/19
533
Equipment
3,800
7/22
534
Utilities
600
7/30
535
Advertising
1,200
$9,370
$8,950
