Exercise 6-6 (20 minutes)
1.
Jan. 1 Petty Cash…………………………….…………….…….…... 200
Cash…………………………………..…………….….…... 200
To establish a petty cash fund.
2.
Jan. 8 Postage Expense…………………………………….….….. 74
Merchandise Inventory*…………………….…..…….…. 29
3.
Jan. 8 Postage Expense…………………………………….….….. 74
Merchandise Inventory…………..….…….….….….….. 29
Delivery Expense……………..……………………..….….. 16
Exercise 6-7 (10 minutes)
1. The voucher system of control establishes procedures for: (a) Verifying,
2. All expenditures should be overseen by a voucher system of control
(not only the purchase of merchandise).
3. The voucher is initially prepared by the accounting department when it
Exercise 6-8 (20 minutes)
Bank
Balance
Book Balance Not Shown
on
Add Deduct Add Deduct Adjust Reconciliation
1. NSF check from customer returned
on Sept. 25 but not recorded by this
company.
x Cr.
2. Interest earned on the account. x Dr.
7. Check written against the company
account and cleared by the bank;
erroneously not recorded by the
company recordkeeper.
x Cr.
8. Principal and interest on a note
receivable to this company is
collected by the bank but not yet
recorded by the company.
x Dr.
9. Checks written and mailed to payees
on October 2. x
Exercise 6-9 (25 minutes)
DEL GATO CLINIC
Bank Reconciliation
June 30, 2015
Bank statement balance. . $10,555 Book balance…………….…………………..………………...$11,589
Add Add
Deposit of June 30……... 2,856
Error on Ck. No. 919……………..……………..………..... 9
Exercise 6-10 (10 minutes)
June 30 Cash………………..………………..………………….…… 9
Utilities Expense…………..………………….…… 9
To correct a journal entry error.
Exercise 6-11 (25 minutes)
WRIGHT COMPANY
Bank Reconciliation
May 31, 2015
Bank statement balance. . $25,800 Book balance…………….…………………..………………...$27,500
Add
Deposit of May 31…....... 6,200
Bank error…………….…… 400
Exercise 6-13A (10 minutes)
Exercise 6-14B (25 minutes)
a. Recording inventory at gross amounts
Oct. 2 Merchandise Inventory……………..………..….….…….…..3,000
Accounts Payable……….……………….…………………. 3,000
To record merchandise purchases.
27 Accounts Payable…………….………………..….…….….…..5,400
Merchandise Inventory*……………………………..…... 108
Cash…………………………………..………………………….. 5,292
To record payment for merchandise less the
discount. *($5,400 x .02)
Exercise 6-14B (Concluded)
b. Recording inventory at net amounts
Oct. 2 Merchandise Inventory………………………..….….…….….2,940
Accounts Payable……….……………….…………………. 2,940
To record merchandise purchases less
discount [$3,000 – ($3,000 x .02) = $2,940].
17 Merchandise Inventory……………………….….….….……..5,292
Accounts Payable……….……………….…………………. 5,292
To record merchandise purchases less
discount [$5,400 – ($5,400 x .02) = $5,292].
PROBLEM SET A
Problem 6-1A (20 minutes)
2. Violates the principle of establishing responsibility. Only Julia should
have access to the petty cash fund since she is the custodian. The
3. Violates the proper application of technological controls. While the daily
backup is a very good internal control, the tape needs to be taken off the
4. Violates regular and independent review. Benedict Shales needs to
5. Violates the insuring of assets and the bonding of key employees. We
do not have enough information to know if the company can afford the
move to the higher deductible on the property insurance. However, we
Problem 6-2A (20 minutes)
Part 1
May 1 Petty Cash…………….………………………………………..……300.00
May 15 Janitorial Expenses…………………..……………….………… 88.00
Miscellaneous Expenses…………….………………….….… 53.68
Postage Expenses…………….……………….………………… 53.50
May 16 Petty Cash…………….……………….…………………….……...200.00
Cash…………………………………..………………………….. 200.00
To increase the petty cash fund to $500.
Note: The May 31 entries can be combined into one entry.
May 31 Postage Expenses…………….……………….…………………147.36
May 31 Cash…………….…………………..…………….…………………...100.00
Petty Cash……………………………..…………………….… 100.00
To decrease the petty cash fund to $400.
Part 2
If the May 31 replenishment is not made and no entry is recorded, then
several expenses would not be recognized and both net income and equity
Problem 6-3A (30 minutes)
Part 1
Feb. 2 Petty Cash……………………………..………………..…..….….. 400
Cash…………………………………..………………………….. 400
To establish the $400 petty cash fund.
Part 2
Nakashima Gallery
Petty Cash Payments Report (for February)
Delivery expense
Feb. 23 Delivery of customer’s merchandise…………………….. $ 20.00
Mileage expense
Feb. 14 Reimbursement for mileage……….……………….….……. 68.00
Postage expense
Office supplies expense
Feb. 5 Purchased paper for copier……………..……………….…..14.15
Feb. 20 Purchased stationery………………..……………………….… 67.77 81.92
Total $277.47
* Transportation-in costs are included in Merchandise Inventory under a perpetual system.
Part 3
Feb. 28 Delivery Expense…………..……………………………………..20.00
Mileage Expense……………..………….……..….….…….…..68.00
Postage Expense………………………………………………….61.95
Merchandise Inventory……………………….….….….….….45.60
Feb. 28 Petty Cash………….………………………………….…….….…..100.00
Cash…………………………………..………………………….. 100.00