105. Delco Construction
The following items relate to the company’s March bank reconciliation:
Bank statement balance
$29,600
Unadjusted cash balance according to company records
?
Deposit in transit
2,200
Outstanding checks
3,100
Bank service charges
200
Interest earned on the bank account
100
Customer’s NSF check returned by the bank
300
Refer to Delco Construction. What is the company’s unadjusted cash balance in its accounting records at March 31st before the reconciliation was
completed?
106. Delco Construction
The following items relate to the company’s March bank reconciliation:
Bank statement balance
$29,600
Unadjusted cash balance according to company records
?
Deposit in transit
2,200
Outstanding checks
3,100
Bank service charges
200
Interest earned on the bank account
100
Customer’s NSF check returned by the bank
300
Refer to Delco Construction. What is net amount of the adjustments to the company’s cash balance as a result of the bank reconciliation?
107. Designs on You
The following information relates to the company’s May bank reconciliation:
Bank statement balance
$5,000
Unadjusted cash balance from the company records
?
Deposit in transit
1,000
Outstanding checks
500
Bank service charges
50
Interest earned on the bank account
10
Customer’s NSF check returned by the bank
25
In addition, a check was recorded in the accounting records as $1,200 but the correct amount as recorded by the bank was only $1,000.
Refer to Designs on You. What is the unadjusted cash balance according to the company’s records May 31st?
108. Designs on You
The following information relates to the company’s May bank reconciliation:
Bank statement balance
$5,000
Unadjusted cash balance from the company records
?
Deposit in transit
1,000
Outstanding checks
500
Bank service charges
50
Interest earned on the bank account
10
Customer’s NSF check returned by the bank
25
In addition, a check was recorded in the accounting records as $1,200 but the correct amount as recorded by the bank was only $1,000.
Refer to Designs on You. What is the company’s adjusted cash balance at May 31?
109. Designs on You
The following information relates to the company’s May bank reconciliation:
Bank statement balance
$5,000
Unadjusted cash balance from the company records
?
Deposit in transit
1,000
Outstanding checks
500
Bank service charges
50
Interest earned on the bank account
10
Customer’s NSF check returned by the bank
25
In addition, a check was recorded in the accounting records as $1,200 but the correct amount as recorded by the bank was only $1,000.
Refer to Designs on You. What is the net amount of the adjustments to the company’s cash balance as a result of the bank reconciliation process?
110. Dreammaker Kitchens
The following information relates to the company’s November bank reconciliation:
Bank statement balance
$10,700
Unadjusted cash balance from the company’s records
?
Deposit in transit
2,100
Outstanding checks
1,200
Bank service charges
300
Interest earned on the bank account
100
Customer’s NSF check returned by the bank
400
Refer to Dreammaker Kitchens. What is the company’s adjusted cash balance on November 30th?
111. Dreammaker Kitchens
The following information relates to the company’s November bank reconciliation:
Bank statement balance
$10,700
Unadjusted cash balance from the company’s records
?
Deposit in transit
2,100
Outstanding checks
1,200
Bank service charges
300
Interest earned on the bank account
100
Customer’s NSF check returned by the bank
400
Refer to Dreammaker Kitchens. What was the company’s unadjusted cash balance on November 30th before the bank reconciliation process was
undertaken?
112. Dreammaker Kitchens
The following information relates to the company’s November bank reconciliation:
Bank statement balance
$10,700
Unadjusted cash balance from the company’s records
?
Deposit in transit
2,100
Outstanding checks
1,200
Bank service charges
300
Interest earned on the bank account
100
Customer’s NSF check returned by the bank
400
Refer to Dreammaker Kitchens. As a result of the bank reconciliation process, what is the net increase or decrease in cash which must be recorded
on the company’s books?
113. According to the Sarbanes-Oxley Act of 2002, who is primarily responsible for establishing and
maintaining a system of internal control over the company’s financial reporting?
114. Which of the following is not a requirement of the Sarbanes-Oxley Act?
115. Which of the following is not a requirement of a company’s top managers under the Sarbanes-Oxley Act?
116. The only essential element of internal control from the following is
117. Which of the following is not a generally recognized internal control activity?
118. Which of the following is not a generally recognized internal control activity?
120. Which internal control activity is followed when management authorizes the purchasing department to
order goods and services for the company?
121. Which internal control activity is followed when the work of one department acts as a check on the work
of another?
122. Which internal control activity is followed when inventory storage areas are secured with limited access?
123. A physical count of inventory is required even though the company uses the perpetual inventory system.
This is an example of which of the following internal control activities?
124. Having one employee prepare company checks and sign those checks relates to which internal control
activity?
125. Which one of the following statements regarding internal control is false?
126. Strategic risk assessment is primarily concerned with:
127. The control activity “segregation of duties” is most effective in:
128. Which of the following statements best describes the act of collusion?
129. Which internal control activity is violated when the cashier at a cash register in a retail store also records
the daily receipts in a journal?
130. Which of the following documents is used in the control of cash receipts?
131. Each of the following documents is used in the control of cash receipts except:
132. Each of the following documents is used in the control of cash disbursements except:
133. The operating cycle is the elapsed time between the:
134. Internal control systems provide assurance in each of the following areas except:
135. A company’s control environment is primarily influenced by the tone at the top. This refers to each of the
following except:
136. All of the following would be considered internal control weaknesses except:
137. The practice of monitoring activities within the internal control system is likely to be carried out by each of
the following groups except:
138. Which of the following is a transposition error?
139. A customer’s check for $25 that had been deposited into the company’s checking account the previous
month was returned stamped “NSF” by the bank. Which of the following journal entries is required?
140. During the bank reconciliation process, an accountant identified an error. A check written for $20 to pay a
supplier for goods purchased on credit was erroneously recorded in the company’s records for $200. Which of
the following entries would correct this error?
141. The account which records differences between amounts of cash deposited and amounts from the cash
register tapes is called
142. Which of the following is not a sound internal control procedure for cash disbursements?
143. The amount of cash in the cash register from sales totals $534. The amount for sales recorded on the cash
register tape was $530. Which journal entry is required?
144. It is important that the petty cash custodian
145. Which of the following is the correct entry to establish a petty cash fund in the amount of $300?
146. A petty cash custodian maintains a $250 petty cash fund. At the end of each month, the custodian tallies
the records of the petty cash transactions and presents them for reimbursement.
April 4
U.S. Post Office (postage)
$ 48
April 21
Callabaugh Supply (office supplies)
146
April 25
Speedy Delivery (package delivery)
35
Which of the following entries is necessary for recording the replenishment of the fund?
147. A company’s bank statement balance shows that there is $4,230 in the checking account at the end of the
month. Comparing the company’s records with the bank statement reveals several additional items, such as
outstanding checks of $2,880, deposits in transit of $1,280, an NSF check of $160, and a bank service charge of
$40. Calculate the adjusted cash balance for this checking account.
148. A company’s bank statement balance shows that there is $4,190 in the checking account at the end of the
month. Comparing the company’s records with the bank statement reveals several additional items, such as
outstanding checks of $1,860, deposits in transit of $2,080, an NSF check of $209, interest earned of $21.52, a
bank service charge of $40, and a check for $120 recorded twice by the company. Calculate the adjusted cash
balance for this checking account.
149. A company’s records indicate the balance in its checking account at the end of the month is $5,671.
Comparing the company’s records with the monthly bank statement reveals several additional cash transactions,
such as a bank service charge of $75, a $4,000 note receivable collected by the bank plus interest earned of
$100, and an NSF check for $350. Determine the company’s adjusted cash balance and prepare the journal
entries necessary to adjust the account balance.
150. A company’s records indicate the balance in its checking account at the end of the month is $3,918.
Comparing the company’s records with the monthly bank statement reveals several additional cash transactions,
such as deposits in transit of $4,022, three outstanding checks totaling $497, a $30 bank service charge, a
$1,000 note receivable collected by the bank plus interest earned of $35, and an NSF check for $150. Determine
the company’s adjusted cash balance and prepare the journal entries necessary to adjust the account balance.
151. The accounting records for Durden Rentals shows a cash balance of $13,676 on March 31, 2012. On the
evening of March 31, company receipts of $3,250 were placed in the bank’s night deposit drop box; this deposit
was processed by the bank on April 1. The March 31 bank statement shows balance of $9,866, including a
service charge of $45, an NSF check from a customer for $210, and a $650 debit memo for the payment of the
company’s utility bill. All of the checks that the company had written during March were listed on the bank
statement except for check #2156 in the amount of $345.
Prepare a bank reconciliation to calculate the company’s adjusted cash balance at March 31, 2012.
152. The accounting records for Dutch Island Company shows a cash balance of $4,133 on January 31, 2012.
On the evening of January 31, company receipts of $1,250 were placed in the bank’s night deposit drop box; this
deposit was processed by the bank on February 1. The January 31 bank statement shows balance of $8,876,
including collection of a $5,000 note receivable plus $55 of interest earned, a service charge of $40, and a $550
debit memo for the payment of the company’s utility bill. All of the checks that the company had written during
January were listed on the bank statement except for check #731 in the amount of $1,528.
Prepare a bank reconciliation to calculate the company’s adjusted cash balance at January 31, 2012.
153. The accounting records for Delta Driving School shows a cash balance of $14,134 on February 28, 2012.
On the evening of February 28, company receipts of $1,250 were placed in the bank’s night deposit drop box;
this deposit was processed by the bank on March 1. The February 28 bank statement shows balance of $18,877,
including collection of a $6,000 note receivable plus $55 of interest earned, a service charge of $40, and a
$1,550 debit memo for the payment of the company’s utility bill. All of the checks that the company had written
during January were listed on the bank statement except for check #1908 in the amount of $1,528.
A) Prepare a bank reconciliation to calculate the company’s adjusted cash balance at February 28, 2012.
B) Prepare the journal entries needed to adjust the cash records as a result of the bank reconciliation
procedures.
154. The accounting records for Dusek Dentistry, Inc. show the following information for February 28, 2012:
Date
Amount
Number
Date
Amount
Balance
Feb. 1
$ 8,510
Checks:
343
Feb. 2
4,100
Receipts
10,600
344
Feb. 4
1,800
Payments
(11,300)
345
Feb. 11
2,100
Balance
Feb. 28
7,810
346
Feb. 12
1,200
347
Feb. 18
300
348
Feb. 26
400
Deposits:
Feb. 4
$ 1,200
349
Feb. 28
1,400
Feb. 11
1,200
$11,300
Feb. 18
2,700
Feb. 25
3,400
Feb. 26
700
Feb. 27
200
Feb. 28
1,200
$10,600
Additional information pertaining to this checking account was obtained by comparing the monthly bank statement with the company’s records. The
following was revealed:
1.
The ending cash balance per the bank statement was $7,960.
2.
Deposits of 2,100 from February 26-28 are in transit.
3.
Checks 347 and 349 are outstanding.
4.
An $100 NSF check from a customer did not clear the bank. This NSF check was included in the February 25th deposit.
5.
Check #343 was prepared correctly as a $1,400 payment on account. This check was properly recorded by the bank, but was erroneously
included on the company’s records in the amount of $4,100.
6.
A debit memo for $2,000 was shown on the bank statement as notice that the company’s rent was automatically paid from the checking
account on February 1st.
7.
A credit memo for $15 was shown on the bank statement as notice that the company had earned interest on its average daily balance in this
checking account.
8.
The bank’s fees for the month totaled $65.
A) Prepare a bank reconciliation to calculate the company’s adjusted cash balance at February 28, 2012.
B) Prepare the journal entries that must be recorded to adjust the cash records as a result of these bank reconciliation procedures.
155. Dinah Corp. prepares monthly bank reconciliations of its checking account balance. The bank statement
for June 2013 indicated the following:
Balance, June 30, 2013
$63,400
Bank service charges for June
160
Interest earned during June
100
NSF Check from a customer which had been previously deposited by Dinah
1,150
Collection of note ($3,000) and the related interest ($80) from Dinah’s
customer
3,080
An analysis of canceled checks and deposits and the records of Dinah revealed the following items:
Checking account balance per Dinah’s accounting records
$58,770
Outstanding checks as of June 30
4,630
Deposits in transit on June 30
1,780
Error in recording check # 3549 issued by Dinah
90
The correct amount of check # 3549 is $760, but it was recorded as a cash disbursement of $670. The check was issued to pay for merchandise
purchased. The check was written correctly and appeared on the bank statement correctly.
A)
Prepare a bank reconciliation in proper form for June 30, 2013.
B)
What amount should be reported as the cash balance on the June 30, 2013 balance sheet?
A)
Bank Reconciliation
June 30, 2013
Cash balance from the bank statement
$63,400
Add: deposits in transit
1,780
Less: outstanding checks
(4,630)
Adjusted cash balance
$60,550
Cash balance from company records
$58,770
Add: interest earned
Add: note and interest collected by the bank
3,080
Less: NSF check
(1,150)
Less: bank service charges
(160)
Less: correction of error
(90)
Adjusted cash balance
$60,550
$60,550