Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
141.
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.
142.
Bank reconciliation information for Kaden Co. for May 31 is as follows:
(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.
Record the appropriate journal entry for Kaden Co.
Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
143.
The bank statement for Farmer Co. indicates a balance of $7,735.00 on June 30. After the journals for June had
been posted, the cash account had a balance of $4,098.00. Prepare a bank reconciliation on the basis of the
following 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.
144.
Accompanying a bank statement for Marsh Land Properties is a credit memo for payment on a $15,000 1-year
note receivable and $900 of interest collected by the bank. Marsh Land Properties had been notified by the bank
at
the time of collection, but had made no entries. Journalize the entry that should be made by Marsh Land to
bring the
accounting records up to date.
Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
145.
For each of the following, explain whether the issue would require you to prepare a journal entry for your
company,
assuming any original entry is correct. If an entry is required, please include it as part of your answer.
(1)
The bank recorded your deposit as $91 rather than the actual amount of $191.
(2)
Two outstanding checks amounted to $450.
(3)
Company check number 538 for postage was recorded incorrectly by the company bookkeeper as $50 instead
of $59.
(4)
The bank paid a check for $500 after the company had issued a stop payment and voided the check.
(5)
An EFT deposit was made by one of the company’s customers, Atlas Design, for merchandise received. The sale
had previously been recorded when shipped and was equal to the payment amount of $125.
Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
146.
The following data were gathered to use in reconciling the bank account of Savannah Company:
$16,750
16,125
80
2,195
950
3,850
What is the adjusted balance on the bank reconciliation?
147.
The following data were gathered to use in reconciling the bank statement of Build-A-Lot:
Balance per bank
$14,355
Balance per company records
14,010
Bank service charges
80
Deposits in transit
4,100
NSF checks
775
Outstanding checks
5,300
Required:
(1)
What is the adjusted balance on the bank reconciliation?
(2)
Journalize any necessary entries for Build-A-Lot based on the bank reconciliation.
Accounts Receivable
Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
148.
Roper Electronics received its bank statement for the month of August with an ending balance of $11,740. Roper
determined that check #613 for $155 and check #601 for $420 were both outstanding. Also, a $6,900 deposit for
August 30 was in transit as of the end of the month. Northern Regional Bank also collected a $5,000 notes
receivable on August 1 that was issued March 1. Accrued interest is $250. Northern Regional Bank charged a $35
fee for the collection service. The bank statement reveals a bank service charge of $20. A customer check for
$68 was returned with the bank statement marked “NSF.” The ending balance of the Roper cash account is
$12,938.
Prepare a bank/account reconciliation and any necessary journal entries for the reconciliation.
Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
149.
Green Valley Bank sent Comstock Industries its end-of-month bank statement for July. The end of month
balance
by the bank is $11,237. The statement shows that a deposit for $4,250 is in transit at the end of the
statement
period. The statement also revealed that checks for $87, $105, and $95 are outstanding. Green Valley
collected a $4,000 note receivable plus $240 of interest revenue. The bank charges $20 for the collection
service. The bank
charges a monthly account fee of $35. The end-of-month balance per company books is
$11,135.
Prepare a bank/account reconciliation and write any necessary journal entries for the reconciliation.
Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
150.
The cash account for Santiago Co. on May 31 indicated a balance of $20,915. The March bank statement
indicated an ending balance of $25,645. Comparing the bank statement, the canceled checks, and the
accompanying memos
with the records revealed the following reconciling items:
a.
Checks outstanding totaled $5,975.
b.
A deposit of $3,796 had been made too late to appear on the bank statement.
c.
A check for $1,482 returned with the statement had been incorrectly recorded as $482. The check was
originally issued to pay on account.
d.
The bank collected $4,515 on a note left for collection of which $515 was interest revenue.
e.
Bank service charges for May amounted to $70.
f.
A check for $894 was returned by the bank because of insufficient funds.
Prepare a bank reconciliation as of May 31. Journalize the necessary entries.
Santiago Co.
Bank Reconciliation
May 31
Journal
Date
Description
Post. Ref.
Debit
Credit
Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
151.
The bank statement for Jeffrey Co. indicates a balance of $8,785 on October 31. After the journals for October
had been posted, the cash account had a balance of $8,998.
(a)
Cash sales of $945 had been erroneously recorded in the cash receipts journal as $495.
(b)
Deposits in transit not recorded by bank, $778.
(c)
Bank debit memo for service charges, $40.
(d)
Bank credit memo for note collected by bank, $23,985 plus $885 interest.
(e)
Bank debit memo for $756 NSF (not sufficient funds) check from Calin Sams, a customer.
(f)
Checks outstanding, $1,860.
Record the appropriate journal entries that would be necessary for Jeffrey Co.
Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
152.
The bank statement for Gatlin Co. indicates a balance of $7,735 on June 30. After the journals for June had been
posted, the cash account had a balance of $4,098.
(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.
Record the appropriate journal entries that would be necessary for Gatlin Co.
Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
153.
Journalize the entries to record the following:
March 1 Established a petty cash fund of $300.
March 31 The amount of cash in the petty cash fund is now $64. The fund is replenished based
on the following receipts: office supplies, $137; selling expenses, $112.
Record any discrepancy in the cash short and over account.
Journal
Date
Description
Post.
Ref.
Debit
Credit
Description
Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
154.
On April 2, Granger Sales decides to establish a $125.00 petty cash fund to relieve the burden on Accounting.
(a)
Journalize the establishment of the fund.
(b)
On April 10, the petty cash fund has receipts for mail and postage of $43.50, contributions and donations of
$29.50, meals and entertainment of $38.25, and $13.55 in cash. Journalize the replenishment of the fund.
(c)
On April 11, Granger Sales decides to increase petty cash to $200.00. Journalize this event.
155.
The last custodian of the petty cash fund was hospitalized and you have been asked to take stock of the fund
and
replenish it. When you receive the fund, it has $299 in cash and receipts as follows:
Office supplies
$295
Advertising
120
Transportation by Taxi
75
The petty cash fund was established to have $800 in it.
Based on what you have found, what journal entry should be recorded to replenish the fund?
Chapter 8: Sarbanes-Oxley, Internal Control, and Cash
156.
Journalize the entries to record the following:
June 1 Established a petty cash fund of $200.
30 The amount of cash in the petty cash fund is now $57. The fund is replenished based on the
following
receipts: postage, $25; entertainment, $100; and miscellaneous, $20.
Journal
Date
Description
Post. Ref.
Debit
Credit