Problem 8-4A (30 minutes)
Part 1
BRANCH COMPANY
Bank Reconciliation
July 31, 2015
Bank statement balance….. $27,233 Book balance………………………………………………………………………….$27,497
Add Add
Part 2
July 31 Cash…………………………………………………………………..7,955
Collection Expense…………………………………………….. 45
July 31 Accounts Receivable—E. Shaw…………………………… 805
July 31 Miscellaneous Expenses…………………………………….. 25
July 31 Rent Expense…………………………………………………….. 20
Problem 8-4A (Concluded)
Part 3
a. If the company’s Cash account balance of $27,497 is listed on the
bank reconciliation as $27,947 then:
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 8-5A (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
Deduct Deduct
Part 2
Sept. 30 Cash…………………………………………………………………..12.50
30 Cash…………………………………………………………………..1,485.00
30 Accounts Receivable— S.Nilson………………………….600.25
30 Computer Equipment………………………………………….30.00
Problem 8-5A (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:
(1) Some of the checks in the numbered sequence may have cleared the
(2) Some of the checks in the numbered sequence may remain
(3) The issuer of the checks may have voided one or more of the checks
(4) Occasionally, a check will reach the bank but the bank will incorrectly
PROBLEM SET B
Problem 8-1B (20 minutes)
1. Violates both applying technological control and effective segregation
of duties. It is safe to assume that Latisha Tally has knowledge of
2. Violates applying technological controls. The theater’s system needs to
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 8-2B (20 minutes)
Part 1
Jan. 3 Petty Cash………………………………………………………….150.00
To establish the petty cash fund.
Jan. 14 Office Supplies Expense…………………………………….. 14.29
To reimburse the petty cash fund.
* Transportation-in costs are included in Merchandise Inventory
under a perpetual system.
Jan. 15 Petty Cash…………………………………………………………. 50.00
Cash…………………………………………………………….. 50.00
To increase the petty cash fund.
To reimburse the petty cash fund.**
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
Problem 8-3B (30 minutes)
Part 1
Part 2
Blues Music Center
Petty Cash Payments Report (for March)
Delivery expense
Mar. 11 Delivery of customer’s merchandise……………………. $ 10.75
Mileage expense
Merchandise inventory (transportation-in)*
* Transportaon-in costs are included in Merchandise Inventory under a perpetual system.
Part 3
Mar. 31 Delivery Expense………………………………………………..10.75
Mileage Expense…………………………………………………56.80
Note: The two entries on Mar. 31 could be combined into one.
Problem 8-4B (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
51,867.30
Part 2
Dec. 31 Cash…………………………………………………………………..9.00
Office Supplies……………………………………………… 9.00
To correct an entry error.
31 Cash…………………………………………………………………..18,980.00