Problem 6-4A (30 minutes)
Part 1
BRANCH COMPANY
Bank Reconciliation
July 31, 2015
Bank statement balance..... $27,233 Book balance……………..…………………………………….$27,497
Add Add
Deposit of July 31........... 11,514
38,747
Proceeds of note less
collection charge…………………………..……………................. 7,955
35,452
Part 2
July 31 Cash………………………………………….…………………………7,955
Collection Expense………….…………………..….….….…... 45
Notes Receivable………..……………………………..…… 8,000
To record note collection less fees.
July 31 Accounts Receivable—E. Shaw……………………….…... 805
Cash…………………………………..………………………….. 805
To charge account for NSF check plus fees.
Problem 6-4A (Concluded)
Part 3
a. If the company’s Cash account balance of $27,497 is listed on the
bank reconciliation as $27,947 then:
reconciliation will not balance.
b. The bank’s collection of the $8,000 note less the $45 collection fee
should have been added to the book balance of cash. Instead, it was
added to the bank statement balance. As a result:
Problem 6-5A (50 minutes)
Part 1
CHAVEZ COMPANY
Bank Reconciliation
September 30, 2015
Bank statement balance....... $18,453.25 Book balance………………………………………………......$17,404.20
Add Add
Interest earned$ 12.50
Deposit of Sept. 30…………. 1,682.75
20,136.00
Proceeds of note
less $15 fee...1,485.00 1,497.50
18,901.70
Part 2
30 Cash………….………………………………………………………...1,485.00
Collection Expense………………….……..…..….….….….…15.00
Notes Receivable……………………………………………. 1,500.00
To record note collection less fee.
30 Accounts Receivable— S.Nilson…………………..….…..600.25
Cash…………………………………………..……………….…. 600.25
To charge account for NSF check plus fee.
Problem 6-5A (Concluded)
Part 3
There are several possible reasons why some prenumbered checks are
missing from the sequence of canceled checks returned with a bank
statement. Reasons include:
(4) Occasionally, a check will reach the bank but the bank will incorrectly
charge the check to the wrong account. When the bank detects the
error, it will return the check separately with a note of explanation to
the depositor.
Financial and Managerial Accounting, 6th Edition
404
PROBLEM SET B
Problem 6-1B (20 minutes)
1. Violates both applying technological control and effective segregation
of duties. It is safe to assume that Latisha Tally has knowledge of
employee passwords since she implemented the system of password
3. Violates segregation of duties. The company needs to have three
4. Violates applying technological controls. The use of the check protector
5. Violates segregation of duties. It is good internal control to separate
duties for cash receipts and cash disbursements. Moreover, an
Problem 6-2B (20 minutes)
Part 1
Jan. 3 Petty Cash……..…………………………….……………..….…...150.00
Cash…………………………………………..……………….…. 150.00
To establish the petty cash fund.
Jan. 14 Office Supplies Expense…………….….…..….….….….…. 14.29
Jan. 15 Petty Cash…….……………………………..……………..….…... 50.00
Cash…………………………………………..……………….…. 50.00
To increase the petty cash fund.
Jan. 31 Petty Cash…….……………………………..……………..….…... 50.00
Cash…………………………………………..……………….…. 50.00
To increase the petty cash fund.**
**The Jan. 31 entries can be combined into one entry.
Part 2
If the January 31 reimbursement is not made and no entry is recorded, then
the expenses would not be recognized and both net income and equity
Problem 6-3B (30 minutes)
Part 1
Mar. 5 Petty Cash………………………………………………...….….…. 250
Cash…………………………………………..……………….…. 250
To establish the $250 petty cash fund.
Part 2
Blues Music Center
Petty Cash Payments Report (for March)
Delivery expense
Mar. 11 Delivery of customer’s merchandise…………………….. $ 10.75
Mileage expense
Mar. 30 Reimbursement for mileage…………….……….….….…… 56.80
* Transportation-in costs are included in Merchandise Inventory under a perpetual system.
Part 3
Mar. 31 Delivery Expense……………….…………………………………10.75
Mileage Expense……………..……….….….…..….….….…...56.80
Postage Expense……………………………………………....…18.00
Problem 6-4B (30 minutes)
Part 1
SEVERINO CO.
Bank Reconciliation
December 31, 2015
Bank statement balance…….. $46,822.40 Book balance……….………………………………….………...........................$32,878.30
Add Add
Deposit of Dec. 31…………… 9,583.10
Error (Ck 1267).. $ 9.00
56,405.50 Proceeds of note
less $20 fee....18,980.00 18,989.00
Part 2
Dec. 31 Cash……………………………………….…………………………...9.00
Office Supplies…………..……………….….….….….…... 9.00
To correct an entry error.
31 Accounts Receivable—Titus Industries………………...762.50
Cash…………………………………………..……………….…. 762.50
To charge account for NSF check plus fees.
31 Miscellaneous Expenses……….………………….….….…..99.00
Cash…………………………………………..……………….…. 99.00
To record check printing charge.
Part 3
In a banking context, a debit memo is notification from the bank that it has
debited the depositor’s account. Since the depositor’s account is a liability of the
Problem 6-5B (50 minutes)
Part 1
SHAMARA SYSTEMS
Bank Reconciliation
May 31, 2015
Bank statement balance…...... $21,762.70 Book balance ………………………..……………………..$15,177.30
Add Add
Deposit of May 31................ 2,727.30
24,490.00
Proceeds of note less
$50 fee………………………………..…………………............................... 7,350.00
22,527.30
Part 2
May 31 Cash…………………………………….……………………………...7,350.00
31 Accounts Receivable—W. Sox………………..……….…...431.80
Cash…………………………………..………………………….. 431.80
To charge account for NSF check plus fee.
31 Miscellaneous Expenses……….………………….….….…..14.00
Cash…………………………………..………………………….. 14.00
To record bank service fee.