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184)
The following information is available for the Victor Company for its March 31 bank
reconciliation:
From the March 31 bank statement:
Previous
Balance
Total Checks and
Debits
Total Deposits and
Credits
Current
Balance
$9,908
$7,805
$11,905
$14,008
Checks and Debits
Deposits and Credits
Daily Balance
Date
No.
Amount
Date
Amount
Date
Amount
03/03
2874
1,210
03/02
4,340
03/01
9,908
03/11
2906
3,850
03/27
7,270
03/02
14,248
03/15
2905
170
03/31
295
IN
03/03
1,038
03/25
2909
725
03/11
9,188
03/29
2908
1,350
03/15
9,018
03/30
500
NSF
03/25
8,293
03/27
15,563
03/29
14,213
03/30
13,713
03/31
14,008
NSF: A check from a customer, Booker Co. in payment of their account.
100
IN: Interest earned on the account.
From the Victor Company's accounting records:
Cash Receipts Deposited
Date
Cash Debit
March
7
4,340
27
7,270
31
2,090
13,700
Cash Disbursements
Check No.
Cash Debit
2905
170
2906
3,850
2907
460
2908
1,350
2909
725
2910
340
6,895
Cash
Acct. No. 101
Date
Explanation
PR
Debit
Credit
Balance
February
28
Balance
8,698
March
31
Total receipts
R4
13,700
22,398
31
Total disbursements
D5
6,895
15,503
1. Based on the above information, prepare a bank reconciliation for the Victor Company.
2. Prepare the necessary general journal entries to adjust cash to the reconciled balance.
185)
On June 3, Zhang Co. received and recorded a $3,500 invoice for merchandise on which the terms
were 2/10, n/60. The company uses the net method to records invoices. On June 17, the company
discovered that the invoice had been incorrectly filed and the discount lost. Prepare the June 3
general journal entry to record the purchase, the June 17 entry to record the discount lost, and the
August 2 entry to record payment of the invoice.
186)
Akron Company purchased merchandise inventory costing $10,000 with credit terms of 2/10, n/30
on March 7. On March 15, the company paid 1/2 of the amount due. The remaining balance was
paid on April 7.
Required:
a. Record the journal entries related to this transaction using the gross method of recording
purchases.
b. Record the journal entries related to this transaction using the net method of recording purchases.
187)
On August 25, Barrymore Co. purchased $5,000 worth of merchandise on terms 2/10, n/30; on
September 4, the amount due was paid. Using the net method of recording purchases, prepare
general journal entries to record (a) the purchase on August 25, and (b) the cash payment on
September 4.
188)
A company had the following transactions during January:
Jan. 2
Purchased merchandise, invoice price of $16,000, with terms 2/10, n/30.
4
Received a credit memorandum for $4,000, the invoice price on
merchandise returned from the purchase of January 2.
12
Purchased merchandise, invoice price of $15,000, with terms 3/15, n/30.
26
Paid for the merchandise purchased on January 12.
30
Paid for the merchandise purchased on January 2.
Using the net method of recording purchases, prepare the journal entries to record these January
transactions.
189)
A company records purchase invoices at net amounts. On March 5, the company recorded
merchandise purchased, invoice price $17,000, terms 2/15, n/60. On March 24, this company
discovered that the invoice had been incorrectly filed and the discount had been lost. The invoice
was paid on April 1. Prepare journal entries to record these events.
190)
The following information is available to reconcile Dibble Co.'s book balance of cash with its bank
statement cash balance as of April 30. The April 30 cash balance according to the accounting records
is $68,356, and the bank statement cash balance for that date is $73,525.
a. The bank erroneously cleared a $480 check against the account in April that was not issued by
Dibble. The check documentation included with the bank statement indicates the check was actually
issued by Flushing Co.
b. On April 30, the bank issued a credit memorandum for $53 interest earned on Dibble's account.
c. When the April checks are compared with entries in the accounting records, it is found that Check
No. 1828 had been correctly drawn for $1,530 to pay for advertising but was erroneously entered in
the accounting records as $1,350.
105
d. A credit memorandum indicates that the bank collected $10,000 cash on a note receivable for
Dibble, deducted a $30 collection fee, and credited the balance to the company's Cash account.
Dibble did not record this transaction before receiving the statement.
e. A debit memorandum of $895 is enclosed with the bank statement for an NSF check for $870
received from a customer. The bank assessed a $25 fee for processing it.
f. Dibble's April 30 daily cash receipts of $5,102 were placed in the bank's night depository on that
date, but do not appear on the April 30 bank statement.
g. Dibble's April 30 cash disbursements journal indicates that Check No. 1837 for $584 and Check
No. 1840 for $1,219 were both written and entered in the accounting records, but are not among the
canceled checks.
1. Prepare the bank reconciliation for this company as of April 30.
2. Prepare the journal entries necessary to bring the company's book balance of cash into conformity
with the reconciled cash balance as of April 30.
191)
The following account balances are taken from Everest Events at December 31.
2016
2015
Accounts receivable
170,230
260,450
Net sales
1,500,750
1,450,600
Calculate the number of days' sales uncollected for both years. According to this analysis, is the
company's collection of receivables improving? Explain.
192)
The following account balances are taken from Ferguson Sports at December 31.
2016
2015
Accounts receivable
18,020
23,450
Net sales
163,500
157,100
Calculate the number of days' sales uncollected for both years. According to this analysis, is the
company's collection of receivables improving? Explain.
193)
Gardener Company had the following transactions during January:
Jan. 10
Purchased merchandise at a $8,900 price, invoice dated January 10, terms 1/10,
n/30.
13
Received a $900 credit memorandum (at full invoice price) for the return of
merchandise that it purchased on January 10.
18
Purchased merchandise at a $8,500 price, invoice dated January 18, terms 2/10,
n/30.
27
Paid for the merchandise purchased on January 18, less the discount.
31
Paid for the merchandise purchased on January 10. Payment was delayed
because the invoice was mistakenly filed for payment today. This error caused
the discount to be lost.
Using the net method of recording purchases, prepare the journal entries to record these January
transactions.
194)
A company established a petty cash fund in April of the current year and experienced the following
transactions affecting the fund during April. Prepare journal entries to establish the fund on April 1,
to replenish it on April 25, and to record the increase in the fund on April 25.
April 1
Prepared a company check for $300.00 to establish the petty cash fund.
25
Prepared a company check to replenish the fund for the following
expenditures made since April 1.
Paid $84.50 for cleaning services.
Paid $84.00 for postage expense.
Paid $103.15 for office supplies.
Counted $23.35 remaining in the petty cash box.
25
The company decides to increase the fund by $100.
195)
The following information is available to reconcile Hinckley Company's book balance of cash with
its bank statement cash balance as of June 30. The June 30 cash balance according to the accounting
records is $57,542, and the bank statement cash balance for that date is $67,047.
a. The bank erroneously cleared a $295 check against the account in June that was not issued by
Hinckley. The check documentation included with the bank statement indicates the check was
actually issued by Dancer Co.
b. On June 30, the bank issued a credit memorandum for $35 interest earned on Hinckley's account.
c. When the June checks are compared with entries in the accounting records, it is found that Check
No. 1727 had been correctly drawn for $1,450 to pay for advertising but was erroneously entered in
the accounting records as $1,540.
d. A credit memorandum indicates that the bank collected $9,000 cash on a note receivable for
Hinckley, deducted a $30 collection fee, and credited the balance to the company's Cash account.
Hinckley did not record this transaction before receiving the statement.
e. A debit memorandum of $865 is enclosed with the bank statement for an NSF check for $840
received from a customer. The bank assessed a $25 fee for processing it.
f. Hinckley's June 30 daily cash receipts of $6,425 were placed in the bank's night depository on that
date, but do not appear on the June 30 bank statement.
g. Hinckley's June 30 cash disbursements journal indicates that Check No. 1737 for $4,830 and
Check No. 1740 for $3,280 were both written and entered in the accounting records, but are not
among the canceled checks.
h. A debit memorandum for $115.00 indicates the bank deducted the annual lock box fee for the
company.
1. Prepare the bank reconciliation for this company as of June 30.
2. Prepare the journal entries necessary to bring the company's book balance of cash into conformity
with the reconciled cash balance as of June 30.
SHORT ANSWER QUESTIONS
196)
An ________ refers to the policies and procedures managers use to protect assets, ensure reliable
accounting, promote efficient operations, and urge adherence to company policies.
197)
When a company purchases an insurance policy against losses from theft by an employee, that
employee is _ .
198)
Two sales clerks not being permitted to share the same cash register is an example of the internal
control principle of ________.
199)
A sales system with pre-numbered, controlled sales slips is an example of the internal control
principle of ________.
200)
A person who controls or has access to an asset must not keep that asset's accounting records. This
describes the internal control principle of ________.
201)
Having external auditors test the company's financial records and evaluate the effectiveness of the
internal control system is part of the internal control principle of ________.
202)
Two limitations of internal control systems are ________ and ________.
203)
________ are short-term, highly liquid investment assets that are readily convertible to a known
amount of cash.
204)
________ includes currency, coins, and amounts on deposit in checking accounts and savings
accounts.
205)
The use of electronic communication to transfer cash from one party to another is called ________.
206)
A ________ is a document explaining the payment of a check.
207)
On a bank statement, deposits are shown as ________, because the depositor's account is a liability
on the bank's records.
208)
________ reflects the liquidity of a company's accounts receivable.
209)
The account is used to record the effects of cash overages and shortages from errors in
making change or managing a petty cash fund.
210)
A ________ is an internal document (or file) that is used to accumulate information to control cash
disbursements.
211)
A ________ fund is used to make cash disbursements of small amounts to avoid the time and cost
of writing checks.
212)
________ are checks written by the depositor, deducted on the depositor's records, and sent to the
payee, but not yet recorded by the bank at the bank statement date.
213)
Deposits made and recorded by the depositor but not yet recorded on the bank statement are called
________.
214)
A is a report explaining any differences between the checking account balance according
to the depositor's records and the balance reported on the bank statement.
215)
The document the purchasing department sends to the vendor that is used to place an order is the
________.
216)
The document prepared by the vendor that is an itemized statement of goods listing the customer's
name, items sold, sales prices, and terms of the sale is the .
217)
The internal document that is used to notify the appropriate person that ordered goods have been
received and to describe the quantities and condition of the goods is the .
218)
The means of recording purchases under the assumption that the cash discount for prompt payment
will be taken is called the ________.
219)
The ________ requires the managers and auditors of companies whose stock is traded on an
exchange (called public companies) to document and certify the system of internal controls.
